Daily Market Highlights (02.12.2019)

Strategic investor for Medserv


The MSE Equity Price Index rebounded by 0.3% from its seven-month low of 4,713.080 points to 4,727.134 points as the gains in HSBC and BOV outweighed the declines in MIA, Medserv and MIDI. Meanwhile, BMIT and PG traded unchanged with activity across local equities amounting to €0.14 million. Download today’s Equity Market Summary.

Most of today’s attention was centred around Medserv plc as the company issued two important announcements last Saturday. First, the company’s major shareholders entered into a conditional agreement with the Swiss company AMT S.A. (“AMT”) whereby the majority shareholders bound themselves to transfer their shares in Medserv to AMT whilst AMT bound itself to issue a voluntary bid in cash for the acquisition of the entire issued share capital of Medserv. Subject to a number of conditions including Medserv shareholders’ approval, the process will first entail Medserv becoming the parent company of AMT via a share for share exchange. Thereafter, AMT will launch a voluntary bid to all shareholders of Medserv whereby minority shareholders will be offered a cash consideration of €1.102 per share. Subject to the transaction being successfully concluded, the new entity (i.e. the combined Medserv and AMT) will have an operational presence in 26 countries across 4 continents.

In addition, Medserv plc issued an Interim Directors’ Statement providing details of its performance in Q3 2019. The company explained that the significant increase in business led to a surge in EBITDA as this more than doubled to €3.2 million compared to €1.5 million in Q3 2018. The growth was mostly driven by the ILSS segment, supported also by the strong double-digit growth in the OCTG segment. Medserv reiterated that it is confident that it will achieve the targeted EBITDA of €14.1 million for the 2019 financial year and that, despite the various uncertainties related to the oil and gas industry, its outlook is positive. During today’s trading session, the share price of Medserv fell by 11.2% to the €1.11 level across 58,080 shares.

Malta International Airport plc also ended the day in negative territory with a drop of 0.7% to a three-month low of €7.10 on 1,270 shares.

MIDI plc eased by 0.8% back to the €0.64 level after failing to hold on to an intra-day high of €0.69 (+7%). A total of 14,500 shares changed hands. Today, MIDI announced that discussions with Tumas Group Company Limited in connection with the possibility of establishing a joint venture with respect to the development of Manoel Island have been ceased by mutual agreement. Nonetheless, MIDI noted that it remains fully committed to the Manoel Island project and that the development works will commence once the required planning permits are issued.

In contrast, the two largest banks erased some of their recent sharp drops. HSBC Bank Malta plc rallied by 4.2% to regain the €1.25 level albeit on just 1,400 shares. On the other hand, Bank of Valletta plc added 1.4% to regain the €1.075 level across 42,504 shares.

Meanwhile, BMIT Technologies plc stayed at the €0.51 level across 7,300 shares.

A single deal of 3,000 shares left the equity of PG plc at the €1.75 level.

The RF MGS Index opened the week considerably lower as it slid by 0.37% (the sharpest daily drop in three weeks) to a near five-month low of 1,144.914 points. Prices of Malta Government Stocks fell as euro sovereign bond yields surged amid a surprise and broad rebound in European manufacturing activity. A similar trend was also observed in China where surveys of manufacturers and industrial activity pointed to improving confidence and demand. Meanwhile, concerns over the international trade policy of the US remerged as US President Donald Trump announced the imposition of tariffs on steel and aluminium imports from Brazil and Argentina.

Today, the Board of Directors of Tumas Investments plc issued a statement to update bondholders on the affairs of the company and of the guarantor of its bonds – namely Spinola Development Company Ltd (“SDC”). The statement relates to recent developments concerning one of its former directors and maintains that the resignation of Mr Yorgen Fenech is not expected to impact management continuity at SDC. Contrary to what has been reported on the local media, the Tumas Group is led by Mr Raymond Fenech who has been at the helm since 2014. Although the Tumas Group disassociates itself with allegations of irregularities, it has nonetheless decided that, in the light of the events that have unfolded over the past days, it will now seek additional comfort through an independent external report. The financial performance of SDC remains satisfactory and fully in line with the forecasts as published in the Financial Analysis Summary dated 28 June 2019. SDC also continues to enjoy the support of the various local and international stakeholders and partners involved in its operations.

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