New hotel boosts AX Real Estate’s revenue

The MSE Equity Price Index rose by 0.33% to 3,771.291 points as the gains in HSBC, APS, GO, MIA, and Farsons outweighed the declines in BOV and Plaza. Meanwhile, Malta Properties Company plc closed unchanged at the €0.30 level on muted activity as today’s trading activity in local equities amounted to €0.29 million. Download today’s Equity Market Summary.

Yesterday evening, AX Real Estate plc published its Annual Report and Financial Statements for the year ended 31 October 2023. Revenue surged by 31.9% to €11.8 million driven by the additional rental income from the Group’s largest property, AX ODYCY Hotel, which opened in late May 2023.  Furthermore, the performance of the hotels in Sliema and Valletta improved the Group’s variable rent. Excluding the fair value movements of investment property, the Group’s operating profit increased by 40.4% to €10.6 million, which translates into an improved operating profit margin of 90.2% (FY2021/22: 84.7%). The financial performance was impacted by a downward movement on the fair value of investment property of €1.82 as well as a waiver of €1.0 million which it owed to its parent company AX Group plc. Net finance costs increased by 58.9% to €5.20 million reflecting the increase in borrowings and the impact of higher rates on variable loans. AX Real Estate reported a pre-tax profit of €4.58 million and a net profit of €0.41 million. When compared to the previous year, total equity fell by 4.5% (or €6.4 million) to €135.6 million which translates into a net asset value per share of €0.494 (31 October 2022: €0.518).

HSBC Bank Malta plc was the most actively traded equity for the second consecutive session as it increased by a further 1.5% to a fresh four-year high of €1.38 across eight trades totalling 85,973 shares. Yesterday, HSBC Malta published its financial results for 2023. Net interest income increased by 81% to €195.8 million, driven by the additional increases to the ECB’s overnight deposit facility which boosted income from excess liquidity. Excluding insurance operations, non-interest income dropped by 11.4% to €27.1 million, while HSBC Life Assurance (Malta) Limited reported a profit before tax of €6.2 million. The financial performance was also boosted by the release of ECL’s amounting to €4.6 million, which however was lower than the release of €9.6 million in the previous year. Overall, HSBC Malta reported a profit before tax of €133.9 million, which is more than double the pre-tax profit of €55.6 million generated in 2022. The net profit figure for the year amounted to a record of €86.8 million (equivalent to €0.241 per share) which translates into a return on average equity of 17.1%. The Board of Directors is recommending a final net dividend of €0.0585 per share. The dividend will be paid on 25 April 2024 to all shareholders as at the close of trading on 14 March 2024 subject to approval by the Annual General Meeting scheduled for 18 April 2024. Coupled with the net interim dividend of €0.039 per share paid in September 2023, the total net dividend attributable for the 2023 financial year amounts to €0.0975 per share, which represents a payout ratio of 40% (2022: 35%).

Also in the banking sector, APS Bank plc gained 0.9% to reach the €0.55 level over three deals amounting to 11,600 shares.

Malta International Airport plc moved 0.9% higher to the €5.60 level on two trades of 1,561 shares. The airport operator will publish its 2023 financial results on Wednesday 28 February 2024.

Also among large companies by market value, GO plc rose by 1.9% to the €3.16 level as 1,600 shares changed hands.

Simonds Farsons Cisk plc advanced by 0.7% to the €6.75 level albeit over trivial volumes.

On the other hand, Bank of Valletta plc shed 0.8% to the €1.31 level across fourteen trades totalling 67,686 shares.

Plaza Centres plc dropped by 3.2% to the €0.60 level on two deals totalling 101,915 shares.

The RF MGS Index fell by 0.49% to an eleven-week low of 884.470 points. Sovereign bond yields in the eurozone and the US continued to increase with both the 10-year German bund yield and the US 10-year treasury yield reaching 3-month highs of 2.45% and 4.33% respectively. The minutes of the last monetary policy meetings of both the US Federal Reserve as well as the ECB showed that policymakers are not considering any imminent rate cuts. In fact, most participants in the meetings noted the risks of reducing rates too quickly and that more data is required before a decision can be taken. The minutes of the ECB meeting particularly stressed the importance of the medium-term component of wage dynamics as well as the change in inflation expectations when considering rate cuts. Data released today confirmed that the inflation in the Eurozone during January was 2.8%, declining from 2.9% last December. Furthermore, during February the private sector in the Eurozone is expected to contract by less than projected despite a downward revision for the expected decline in the corresponding figure for Germany, the eurozone’s largest economy. On the other hand, the expected growth of the public sector in the US during February was revised downwards. Meanwhile, the US labour market continued to show signs of resilience as last week the number of Americans filing for unemployment unexpectedly fell to a 5-week low.

This report contains public information only and is not to be construed as investment advice or an offer to buy or sell any securities. Information contained herein is based on data obtained from sources considered to be reliable, but no representations or guarantees are made with regard to the accuracy of the data. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Rizzo, Farrugia & Co. (Stockbrokers) Limited is a company licensed to undertake investment services in Malta by the MFSA under the Investment Services Act, Cap—370 of the Laws of Malta and a member of the Malta Stock Exchange.