The stocks world's flat

A generally flat market saw six shares ending lower, five ending higher, and seven remaining unchanged, five of which did not trade; 191 bargains were struck, with an aggregate value of €1.9 million.

Bank of Valletta continued its recent slide, opening at €4.85 and closing at €4.75. Despite its attractive dividend, it is hard to see the shares gaining traction until the Unicredito overhang issue is resolved. We remain admirers of the superb management team. At the close, 8,410 shares were best bid at €4.70, while 1,354 shares were best offer at €4.75 (throughout the report I have somewhat bravely elected to use only two decimal places, not wishing to bore the reader with useless trivia or propagate the wholesale re-introduction of tedious mils by stealth in our industry. In theory, the third decimal place could be material and worthy of contemplation on a balmy Sunday morning while reading over a cup of tea - especially if you were the actual bidder or 'offeror' although in that case you don't really need me to tell you what your bid or offer is - but not with the typical scraps left on the book at close of play).

Rival HSBC fared better, closing 4c to the good at €3.80. Despite this, it remains a painful 20% off the price at the start of the year. Still, such a setback pales into insignificance when compared to the gain on a five-year view - this has been a spectacularly good investment. HSBC is a difficult share to sell for those looking for income, but the flipside of the monster dividend payouts is that the equity base takes the hit. The result is that HSBC's market cap of €1.1 billion is an eye-watering four times its equity base of €277 million (December 2007). Compare that to BOV which has a market cap of €634 million, and an equity base of €385 million (March 2008) - a remarkable discrepancy which mysteriously never seems to be remarked upon. Even given its undoubted quality and undisputed No. 1 business franchise status in Malta, is HSBC really worth nearly twice as much as BOV? Is that a reflection of the market's assessment of the banks' relative share of net present value of future banking cash flows to be generated in Malta?

Lombard had a good week, ending 2.5% higher at €3.08; 15,890 shares were traded during the week. Purely academic, but nevertheless a fact, at the close 700 shares were best bid at €2.55; 796 shares were best offer at €3.08.

Middlesea was unchanged at €3.43, but with some healthy volume. Best bids and offers at the close were tight with around 5,000 shares at €3.41/3.43, putting many a (albeit theoretical as currently nonexistent) market maker to shame.

Go kept going south, hard landing on €2.74, 6 cents off for the week. Perhaps the market is disappointed by Go's '3 Fs': flat revenues, flat dividends and falling profitability. Or perhaps it is concerned that Go is putting its previously robust balance sheet on the line when accepting gifts borne by Greeks. Is Go worth more today than it was at IPO? Should I be investing in Forthnet directly if this is to be Go's main share price driver? Management is putting in a valiant effort here, and the motivation is always to safeguard shareholder value, but it's very hard work with the cards they have been dealt.

IHI, the third largest company on the MSE by market cap having surpassed Go some time ago, was flat at €1.07. If we include the 'mils', which I would rather not, the shares were up 0.003 cents for the week, bringing the market cap 0.28% closer to management's perceived fair value. 27,862 shares were traded, value €30,000.

To three decimal points (two can play at that game) this represents 0.000% of the issued share capital. You have to have some sympathy for the chairman's oft-expressed lament that the local market does not reflect the company's fair value, if a third decimal point on a handful of shares can impact the value thus.

We look forward to the secondary listing in London, with hopefully improved liquidity. (The mils, however, will no doubt be sacrificed on the LSE but those insisting on a more accurate reflection of fair value will be able to keep trading, or not as the case may be, on the MSE). On the news front, IHI announced an agreement with major player Intourist of Russia "to jointly develop and invest in the four and five categories across the Russian Federation... The intention is to create Russia's largest hotel chain..." The initial war chest will be $100 million. Those lucky enough to have visited Moscow for the recent European Cup final will have witnessed first-hand both an entertaining match with a happy result, and the astronomic cost of lodging. This is an exciting development, with plenty of scope for major value add with expert execution, and we shall monitor progress with interest.

Also in the news was Simonds Farsons Cisk, who issued the interim directors' statement. This pointed out that the now fully liberalised market 'has seen large influx of imported beverages at low pricing positions. The fierce and stiff competition is expected to continue, and the company has strategies to combat this development'. This might be a reference to Lidl, among others. The other focus for SFC investors is of course the extraction of value from the company's substantial property assets. The shares were flat at €2.71 for the week, with 5,000 shares traded.

Maltapost took a chunky 7c hit on Friday, closing at 75 cents.

It has recently issued excellent interim results, ahead of expectations.

Crimsonwing drifted lower to 50c, the launch price.

Fimbank was flat at $1.89, but with huge volume of 907,139 shares, value $1.08 million - easily the highest value for the week.

GlobalCapital ended 9c off at €2.85, Plaza was up a cent. The rest of the MSE constituents were either flat or did not trade.

On the horizon is the launch of RS2 Software plc.

Martin Webster is equity analyst at Curmi and Partners Ltd. Curmi & Partners Ltd are licensed to conduct investment services business by the MFSA and are members of the MSE. The value of investments and the income derived there from may rise as well as fall. Past performance is no guarantee of the future. Any opinions expressed are those of the author and are subject to change without notice. Readers should note that certain shares are not suitable for certain investors. It is important that readers seek professional advice to help assess whether the shares recommended are suitable for their specific needs.