Credit crunch cools, or April Fool's?
The second quarter started with good gains in the international markets ranging between 4% and 6%. In Malta, it started with a four-day week and also kicked off on a relatively positive note, with the MSE index closing a sliver below 1% up at 4,693.13. While the star performers were low- and mid-cap stocks, all the large-cap stocks - for the first time this year - ended the week in positive territory. This includes a wafer-thin increase of 0.1% in HSBC Bank Malta plc (HSB) and GO plc (GO). Without a doubt, Grand Harbour Marina plc (GHM)'s 20.7% leap takes the gold, as the price bounded ahead on the back of the company's excellent results, albeit on a meagre 12,500 shares (out of the 10 million listed). Fimbank plc (FIM) were a distant second with a 9.8% gain, and 6PM plc (6PM) placed third with a far less impressive - yet equally useful - 2.9% increase. On the losers' side, Maltapost plc (MTP) suffered its worst week since listing, down 13.5% to €0.73.
Bank of Valletta plc (BOV) started the week on a losing streak, dropping 1.8% to €5.50 by Tuesday's close. However, it rebounded to an intra-day high of €5.75 on Wednesday, closing at €5.70. It settled around this price, ending the week at €5.69 - 1.6% higher. BOV's turnover for the week totalled 49,031 shares for a value of €278,715. At the end of trading, total bids for 5,300 shares were at €5.64, whereas offers of 2,000 shares started at €5.68.
On Wednesday, BoV issued a company announcement referring to the credit opinion issued by Moody's last Monday. In essence the announcement was a repetition of the one issued on January 25, reconfirming that the volatility in financial markets will be reflected in the half-yearly results to end March 2008. As noted by Moody's, the bank's securities portfolio is of high quality, and the bank expects the impact of the mark-downs arising from the current market turmoil to be clawed back over time, as the investments are held through to maturity. The half-yearly results are expected to be notified to the MSE on April 29.
HSB was stable as it plodded through the week uneventfully, starting out at €4.415 and closing at €4.42; turnover totalled 18,713 shares for a value of €82,740. At the end of Friday's session, bids for 851 shares were at €4.42, while the best offer for 500 shares stood at €4.43.
GO set a record for its lowest weekly volume for the year, even beating the one-day trading week of January 4. A mere 2,716 shares changed hands - 2,386 shares on Thursday and 330 on Friday - closing just 0.1% higher at €3.014. At the end of trading, best bids totalled 6,000 shares at €3.01 with a supply of 2,770 shares at €3.014.
Investors seem totally underawed by the mushrooming low-cost airline traffic increase to Malta. With the first Easy Jet flight landing at MIA last Sunday, and Spain's Vueling flying in from Madrid last Tuesday - to be joined by Volare and Air One from Italy later this year - one would have expected Malta International Airport plc (MIA) to experience a massive increase in turnover and share price performance. Effectively, it only traded on two days, advancing from Thursday's €3.30 open to a 2008 high of €3.35 on Friday, to close the week 0.9% ahead. The two-day turnover totalled 20,600 shares for a value of €68,554. At the end of the session, the best bid for 2,100 shares stood at €3.33, while offers for 1,151 shares started at €3.35.
International Hotels Investments plc only saw one deal on Wednesday and another one on Friday, the first for 3,000 shares at €1.04 and the second for 9,334 shares at €1.05, for IHI to advance 1% on the week. The board will meet on Tuesday to approve the financial statements for the period ended December 31, 2007.
Lombard Bank plc (LOM) also only traded on two days - Tuesday and Friday - in both cases stable at €13. LOM announced on Thursday that Stefano Loffredi and Gianfilippo Maiga resigned from the board of directors and were replaced by Dimitris Spanodimos and Christos J. Stylianides.
For the second week running, FIM was a hive of activity, again accounting for the highest percentage of turnover by value. This week's turnover of 549,370 shares, with a value of €650,886, represents 52% of the market's equity turnover total. On Tuesday, FIM scaled the price ladder on strong buying activity, climbing from a $1.75 open to a $1.836 close. It hit an all-time high of $1.90 on Wednesday and traded at this level till the end of the week, gaining a robust 9.8% on the previous week.
GHM, the week's star performer, started off the week on a near flat note, at €1.748, despite the release of the company's excellent results released before trading. The company reported a profit before tax of €6.58 million (Lm2,824,997) - a dizzying 475% increase over the previous year, reflected in a 467% increase in earnings per share (EPS) - from €0.07 (Lm0.03) to €0.40 (Lm0.17). During 2007, the company concluded the grant, for long-term use, of three super yacht berths for a consideration of €10 million. Other berthing licences, pontoon fees and revenue from ancillary services grew by 39% to €1.16 million (Lm497,770). The board is recommending the payment of a €0.20 (Lm0.08) net dividend on June 27, to shareholders on the books as at the close of business on May 7, i.e. investors who buy shares up to and including May 2.
The Exchange temporarily removed GHM trade ranges with effect from Thursday morning and the price soared 11.6% (albeit on turnover of just 1,500 shares), leaping a further 7.7% to €2.10 on Friday to close the week an extraordinary 20.7% up on the week.
Middlesea Insurance plc (MSI) and Plaza Centres plc (PZC) were only active on Tuesday and Wednesday respectively. MSI lost the previous week's gains, falling 2.2% to €3.52 on 1,154 shares. PZC lost a near identical 2% on turnover of 5,800 shares on Wednesday. PZC reported a profit before tax of €1.17 million (Lm500,773) - 6.2% increase over the previous year. EPS improved by 2.8% from €0.075 (Lm0.0324) to €0.776 (Lm0.0333). The board is recommending the payment of a €0.073 (Lm0.0314) net dividend on April 29, to shareholders on the books as at the close of business last Friday.
MTP suffered a heavy blow this week, shedding 13.5%. It fell to the bottom of the allowable trade range of €0.785 on Tuesday and €0.731 on Wednesday, ending Friday at €0.73. Supply at this level stands at 37,003 shares, while the best bids totalling 17,169 stand at 68c - virtually the bottom of tomorrow's allowable trade range of 67c9.
In the IT sector, 6PM started the week at 70p and looked set to close the week at 73p. However, the final deal was struck at 72p, making it a 2.9% gain for the week. Turnover amounted to 43,660 shares for a value of €40,013. Crimsonwing plc (CW) on the other hand was stable at €0.56 on turnover of 6,500 shares.
Global Capital plc (GCL) and Medserv plc (MDS) issued their financial statements for the year ending December 31, 2007. Both equities did not trade this week.
GCL reported a profit before tax of €353,743 (Lm151,862), a vertiginous 95% drop over the previous year's €7.39 million (Lm3.17 million). EPS dived by an equally precipitous 88% from €0.36 (Lm0.154) to €0.044 (Lm0.019). Were it not for the profit and loss item 'gains on investment property' - which increased by €2.86 million (Lm1.23 million) over 2006 - the company would have reported a singeing loss of €2.51 million (Lm1.08 million). GCL stated that "the year under review was characterised by a severe downturn in the capital markets which had an adverse effect on the results and operating performance in 2007. This scenario is expected to persist in the near term." In view of these results, the directors do not recommend the declaration of a dividend.
Medserv plc, in which there were only four deals this year and which last traded on January 28, recorded a loss before tax of €287,332 (Lm123,352) as compared to the profit registered in 2006 of €1.2 million (Lm515,288). This represented a negative return of 4.64%, as compared to the positive return of 18.76% in 2006. EPS for 2007 dropped from €0.15 (Lm0.0656) to €0.007 (Lm0.0029) - a vertical 95% nose-dive. This decrease is mainly attributable to delays in the commencement of increased activity which is expected to take place in the oil industry offshore Libya. An interim net dividend of €0.048 (Lm0.0206) was paid on June 6, 2007. The board is not recommending the payment of a final dividend.
Simonds Farsons Cisk plc, which did not deal this week, announced on Tuesday that Philip Farrugia was appointed general manager of Quintano Foods Ltd as from Wednesday. In the Government Bond market, turnover by value reached €598,287 with 23 deals struck in 10 stocks. In the corporate bond market there were 50 deals for a total turnover value of €429,635. Turnover value in the Treasury Bill market totalled €1.7 million.
This report was provided by J.G.P. Bonello, managing director of Financial Planning Services Limited, of Marina Court, G. Cali Street, Ta' Xbiex, which is licensed by the MFSA to provide investment services, including stockbroking (IS/3608). The company is involved in acting as sponsoring stockbroker and corporate stockbroker. The directors or related parties, including the company and their clients, are likely to have an interest in securities mentioned. E-mail: info@bonellofinancial.com or 2134 4243.