Three equities close at record highs
MSE Trading Report for week ending November 14, 2014
The MSE Index added on to last week’s positive performance as it increased by 0.2 per cent, to close at 3,321.763 points. A total of 11 equities were active of which three fell, five gained ground and three closed unchanged. Tigne Mall plc (Tigne Mall) shares registered the best performance for the week, while Bank of Valletta plc (BOV) shares fell marginally as the equity turned ex-div yesterday.
Malta International Airport plcshares rallied to record highs as six transactions of 26,750 shares were struck, to close the week €0.07 higher at €2.40. In its Interim Directors statement released on Thursday, the company reported that no material events or transactions have taken place that would have an impact on the financial position of the company, such that they would require specific mention. The company’s financial position has remained sound, while passenger movements at the airport from the beginning of the year until October 2014, are up by 6.7 per cent over last year. Traffic for the last two months of the year is expected to be similar to that of 2013. The company is therefore forecasting another record year for 2014, with passenger movements expected to reach 4.2 million. The local airport operator will be extending the incentive to refund landing fees to all scheduled airlines during the winter months for the fourth consecutive year. Landing fees will be refunded back to the airlines for the months of November and December 2014 and January, February and March 2015. This initiative is estimated to cost the company approximately €1.4 million in lost revenue. Furthermore, the SkyParks Business Centre is currently in its second full year of operation and has reached full office space occupancy.
Likewise, both Malita Investments plc and Tigne Mall plc closed the week at their all-time highs as they soared by 3.5 per cent and 3.8 per cent respectively. The former witnessed three deals of 27,000 shares, to close at €0.60, while the latter was active across two trades of 31,000 shares, closing at €0.55.
BOV shares were active across the highest turnover volume for the week of 160,977 shares. The banking equity closed in positive territory in the first three trading days of the week with a slight correction on Thursday to then drop by 1.75 per cent and close at €2.24 on Friday when the equity turned ex-div. Meanwhile, FIMBank plc shares traded flat at $0.63 on a single transaction of 1,000 shares.
HSBC Bank Malta plcfully erased last week’s negative performance as its share price appreciated by 0.5 per cent across 29 trades of 86,177 shares, to close at €1.97. After close of trading on Friday, the company announced in its interim directors' statement that during July 1 until November 14, the bank registered a decline in profit before tax compared to the same period last year. Revenue was hit by lower net interest income as a result of the prevailing eurozone interest rate environment, adverse market movements in the yield curve affecting the insurance business and lower one-off items relating to recoveries, bond sales and insurance. Operating expenses for the period were higher than the same period in 2013 – primarily due to an increase in the cost of compliance and regulation. Excluding these items, expenses have been well controlled and are marginally below the same period in 2013. Loans and advances to customers remained broadly unchanged as new lending was offset by early repayments in the low interest rate environment, while customer deposits increased. Meanwhile, loan impairments also increased as a result of lower valuations on properties acting as security and reduced levels of recoveries. During the period, the European Central Bank published the results of the Comprehensive Assessment exercise undertaken on 130 banks located in 19 member states participating in the Single Supervisory Mechanism (SSM) – no capital shortfalls were identified in the results of HSBC both in the base line and adverse scenarios. Hence, the bank remains well capitalised and liquid.
Middlesea Insurance plc shares slipped by 0.4 per cent as 4,000 shares changed hands over four trades, to close at €0.99. Similarly, Medserv plc shares dropped by 0.4 per cent as 4,900 shares changed ownership, closing at €1.325.
On a positive note, Grand Harbour Marina plc shares edged 0.5 per cent higher on one transaction of 425 shares, to close at €1.87. Meanwhile, International Hotel Investments plc shares traded flat over 12 trades of 55,400 shares, closing at €0.56.
MIDI plcshares also traded unchanged as three deals of 57,500 shares were processed, to close at €0.21. In its Interim Directors’ Statement, the company noted that the development of the Q1 residential block has continued to progress in line with projected timelines and budgets. Apartments are to be finished during the course of next year. Meanwhile, the contract of works for the development of the T14 office block at Tigne Point has been awarded, with works set to commence imminently. Furthermore, works on the Q2 building have commenced, which apart from 60 apartments will also include a commercial offering on the ground floor. The apartments are expected to be launched next year. The company has also concluded the last remaining lease agreements in respect of all 10 shopping outlets at Pjazza Tigne. Next year will be the first year where all of the outlets will be fully operational. The Board intends to proceed with works on the Manoel Island project as the development of Tigne Point nears completion. There has been no significant change in the financial position of the MIDI group since the publication of the interim results of 2014. The group is expecting to register an operational loss for this year. The Board expressed that it is confident that this loss will be reversed over the course of 2015, when the profits arising from the sale of the Q1 apartments will be accounted for.
In its Interim Directors’ Statement released on Monday, GO plc (GO) reported that the group has continued to maintain market share, stable revenues, healthy levels of profitability and cash generation. GO is investing in the latest technologies to meet clients’ expectations of robust fixed line and wireless infrastructures and seamless service. Namely, by the launch of “TV Anywhere,” which extends clients’ TV subscription to their mobile phones or tablets. In September the company completed the acquisition of a 25 per cent shareholding in Cablenet Limited – a telecommunications company that operates in Cyprus. The operating performance of Cablenet Limited is in line with expectations and augurs well for the future. Meanwhile, Forthnet Sa – a Greek telecommunications company in which GO holds a share, through Forgendo limited announced that Greek incumbent operator OTE has shown an interest in the acquisition of Forthnet’s pay-tv business. It was also communicated to the investing public that mobile operators Vodafone and Wind – who together own almost 40 per cent of Forthnet’s shares, have shown an interest in jointly acquiring the remaining shareholding in Forthnet. GO has been made aware that Forthnet’s management is currently evaluating both of these opportunities. The Board of Directors of GO expressed that it is satisfied that the group maintains the momentum required for it to implement its strategy of protecting profitability from core telecommunication operations while pursuing new growth opportunities, both locally and internationally, in the interest of shareholder value. The equity was not active this week.
After close of trading on Friday, Lombard Bank Malta p.l.c. announced that during the period commencing 1 July 2014 to date, no material events and/or transactions have taken place, other than mentioned in this and other Announcements, that would have an impact on the financial position of the Bank or the Group, such that would require special mention, disclosure or announcement pursuant to the applicable Listing Rules. The prevailing difficult market environment continues to condition banking sector performance. According to the European Central Bank, geopolitical tensions remain severe and growth drivers appear weak, with macroeconomic adjustments, high unemployment and sluggish investment acting as a drag on economic activity. Though the Maltese economy nevertheless remains resilient, a number of factors are exerting pressure on domestic bank profitability. These include narrowing interest margins, reflecting record low investment yields and high levels of liquidity, and slow loan growth. On the expenditure side, the effect of these factors is compounded by the growing burden of compliance and regulatory costs. Apart from its direct impact on profitability, the new EU regulatory regime is also likely to result in more cautious bank lending policies and perceptions of risk, with inevitable consequences for the economy. This prospect is largely attributable to the regime’s relative inflexibility, which overlooks the internationally-recognised track record and the on-going resilience of Malta’s banks and their lending practices. Against this background, the recent performance of Lombard Bank Malta p.l.c. can be considered satisfactory. Although revenue streams from its core lending and investment activities have been affected by low industry-wide interest rates. Income from commission-based business has continued to increase. As for the Bank’s credit portfolio, reviews currently underway in satisfaction of the new regulatory requirements may result in some technical downgrading of facilities, notwithstanding that in substance the underlying quality remains sound.
While the bank’s outstanding loans and advances remained stable, close to the same level at the start of the accounting period, demand by customers for deposit services increased. However, at a time when financial markets are quoting very low, at times even negative, interest rates, the Bank is being selective in its deposit-taking activity.
Meanwhile, operating costs were contained despite increased outlays in connection with compliance and regulatory requirements, such that the overall financial position remained stable. As was announced in August, an improved performance is expected from the Bank’s subsidiary, MaltaPost plc.
Throughout the period covered by this Announcement, Lombard Bank Malta p.l.c. continued to register high Liquidity and Capital Adequacy Ratios that comfortably exceed regulatory and prudential thresholds, while adhering to its traditionally cautious provisioning policy. The Directors believe that the Bank remains well placed to meet customer needs while providing satisfactory returns to investors for this year.
In the corporate bond market activity was spread across 28 issues of which 12 increased in value, five lost ground and 11 closed unchanged. Total turnover amounted to just under €1.2 million. The recently listed 5% Hal Mann Vella Group plc Secured Bonds € 2024 was the best performer as it advanced by 3.5 per cent in its first trading days, to close at €103.50.
Meanwhile, in the sovereign debt market turnover amounted to €19.8 million as 28 issues were active – 10 issues fell, 15 strengthened and three closed unchanged as all changes recorded were minimal. The 4.3% MGS 2033 (I) was the most liquid issue as it witnessed a turnover value of over €7.4 million.