Maltapost – a rare equity success

I write this having just returned from the Maltapost AGM. Given that it was held next to the cinema, and last year’s AGM was so thoroughly enjoyable, I was tempted to take some popcorn in, sit back and enjoy the show. Fearing I might be set upon by hungry shareholders mistaking me for a waiter, I decided against it (with good reason – I later noticed the Twinings tea box being raided and its contents surreptitiously exported out of the premises).

Unfortunately, this year chairman Joe Said was in a very conciliatory mood on the issue that seems to act as a lightning rod for true patriots – language. This year printed Maltese versions of the chairman’s address were available, and the Q&As were in Maltese. As a result we had none of the spectacular pyrotechnics of last year, and Malta remained an independent state (albeit with elements of subservience to our new European overlords).

What also remained the same was the level of profit – fair enough for what is essentially a cash cow. There is something endearing about a business which is easy to understand, being managed in a straightforward manner, paying a reasonable dividend. The rating has crept up to 15x, which appears well up with events – but chartists will say there is little sign of weakening, despite reference to “increased competition”.

Maltapost has been a rare success on the local equity market – up 100 per cent or so in three years. It enjoys a reasonable following in the market, and its shares are relatively liquid. Other listed companies would do well to take a leaf out of its book.

• I wonder what our patriots would make of the state of play in our European Union. I note that the former economist of UBS, Klaus Wellershoff, has taken offence at the acronym PIGS, viewing it as a derogatory Anglo Saxon term. I thought it was just a simple acronym, which rolls off the tongue quite nicely. Like BRICS. Are we supposed to say Portugal, Ireland, Greece and Spain every time we mention certain European economies on the brink of disaster?

Bizarrely, he includes PIGS member Ireland within the Anglo Saxon derogatory bunch. (Should he not be referring to them as the United States of America, the United Kingdom of Great Britain, and the Republic of Ireland, if acronyms are not his cup of tea?). In any case, if we were to take the phonetic and interpret that as the literal meaning, a pig seems an appropriate term for a country which wants more than others, lives beyond its means and expects others to work harder to make good their excesses and keep the status quo.

And the status quo shall indeed be kept, one way or the other, because there is too much political capital tied up. France for one seems to treat the EU as the latest manifestation of its aggrandisement aspirations, this time by undemocratic stealth. It is all very serious, with delicate conspiratorial undertones, this European project. So serious that none of the politicians seem to have the slightest sense of humour – always a bad sign. They remind me of the robot Daleks on Dr Who, relentlessly exterminating human elements in an utterly predictable manner (therein lies hope) since they are programme-driven.

Try, if you can, to last five minutes watching some of the sessions in the European Parliament (youtube has plenty of clips). Can you imagine grey, dull EU land springing a Boris Johnson type upon us? Admittedly they do not have much to smile about – my face would also look like a bag of tripe if I had so much to worry about.

My modest personal portfolio does not hold any bonds of the porcine variety, so I do not share the same concerns directly – if I am going to risk losing money (and the yields tell you there is a substantial risk, and I’d rather take heed of that than the howls of protests that haircuts are not a plausible option), I want a rather better potential reward, with a less thankless task of tracking and interpreting the minutiae of the latest political machinations, to the extent they are actually visible.

• Speaking of potential reward, one company worth following closely this year is AIM listed Bowleven. (AIM stocks typically carry a higher than average risk). Bowleven is an oil and gas group with onshore and offshore exploration interests in Cameroon and Gabon. (Oil exploration is of course a risky business, so this is not one for widows and orphans as they say). The company is developing a knack for encountering “hydrocarbon-bearing pay zones”. Recent evaluation of the Sapele-1 exploration well (offshore Cameroon, but shallow) indicates that all five objectives show hydrocarbons.

More than that, the well confirms the idea that hydrocarbons in the Cretaceous section extend significantly. The market is usually more interested in instant gratification, so it may not have fully grasped the significance of the latest developments. The shares have performed very well, but retain a lot of upside potential.

This article has been prepared by Martin Webster, an equity analyst at Curmi and Partners Ltd, and is the objective and independent opinion of the author. The information contained in the article is based on public information. Curmi and Partners Ltd. is a member of the Malta Stock Exchange, and is licensed by the MFSA to conduct investment services business.

Mr Webster is an equaity analyst at Curmi & Partners Ltd.


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