Last week a number of companies in the US and Europe began publishing their financial statements as at 30 June 2023. The quarterly reporting seasons across the large international capital markets are always closely followed by investors and financial analysts since they provide important information to investors and the guidance by companies for the upcoming quarter is a key determinant of overall investor sentiment and performance. This year’s reporting season takes on greater importance following the sharp upturn in equity markets despite the consistent hike in interest rates. In fact, at the start of the year, worries about a hard landing arising from the interest rate hikes turned into fears of a widespread banking crisis in March. However, the US stockmarket in particular, overcame these headwinds and performed strongly mainly as a result of the hype surrounding artificial intelligence.
In Malta, companies are obliged to report on a semi-annual basis while a few of the large companies also provide quarterly information to the market. The interim reporting season commenced yesterday with the publication of results by Mapfre Middlesea plc followed by APS Bank plc and Bank of Valletta plc. Next week, HSBC Bank Malta plc and Malta International Airport plc are due to publish their interim financial statements on the same day.
After three very difficult years for Maltese investors, the MSE Equity Price Index staged a partial recovery of 5.5% in the past six months mainly as a result of the sharp upturn in the share prices of the two largest banks. HSBC was the top performer in the first half of 2023 as its share price surged by 69% followed by BOV at +48.2%. BOV’s market capitalisation increased by €228 million in the first six months of 2023 and more importantly this took place on strong trading activity. BOV shares dominated overall trading activity as more than €7 million worth of shares changed hands, surpassing the annual trading activity in this equity for each of the last three years. MIA and HSBC are the only other companies that also attracted a good share of trading volumes while weak activity continued to characterise the other shares.
In view of the sharp upturn in the share prices of the two large banks and also in view of the new interest rate environment, the imminent issuance of the financial results by the two largest banks will be among the most important developments in the coming days. In line with the robust earnings being reporting by the main banks in the US and Europe together with their attractive dividend payments as well as share buyback programmes, many Maltese investors will be paying close attention to the financial statements of the local banks. Moreover, particular focus will be on whether the very positive results will impinge on a more aggressive dividend policy by HSBC and the possible reinstatement of a sustainable dividend by BOV following a long period of virtually no cash dividends. Such developments could be important catalysts for the continued recovery in investor sentiment across the local equity market.
While the elevated interest rate environment across the eurozone will surely result in bumper profits from the larger banks given their sizeable levels of liquidity, the upcoming announcements by all the four retail banks takes on greater importance in view of the likely corporate actions by APS Bank plc and Lombard Bank Malta plc in the months ahead.
Following last year’s highly successful IPO and the authority provided by shareholders during the last Annual General Meeting of APS allowing the directors to issue bonds or other fixed-income securities amounting to a maximum of €150 million, the focus will now turn to the timing and pricing of this bond issue.
Lombard Bank Malta plc also requires additional capital and during the recent Annual General Meeting, shareholders empowered the board of directors to issue up to 65 million new issues. Here again, the focus will be on the timing and pricing of the rights issue and eventually the take-up by the various shareholders in the context of the shareholding structure of the bank.
The publication of financial results by Malta International Airport plc will also be of great interest to the thousands of shareholders as well as to the market at large. Given the traffic results already published for the first half of 2023 showing that passenger movements increased by 5.6% when compared to the first six months of 2019 (pre-COVID), the company is therefore expected to report a record financial performance for the first half of the year. However, the main focus will be on whether the company will resort to their semi-annual dividend policy that was in place prior to the pandemic and the extent of the improved guidance on the traffic and financial forecasts for the upcoming six months. At the start of the year, MIA had projected that during 2023, total passenger movements would amount to 6.3 million representing growth of 7.7% over the 5.85 million passenger movements of 2022 and a recovery of 86% of the record pre-pandemic traffic in 2019 which amounted to 7.31 million passengers. Following the sharper-than-expected recovery in passenger traffic in Malta as well as overseas, it would therefore be interesting to gauge the new forecasts for 2023 and how these compare to the pre-pandemic figures.
Another main area of interest for the local equity market would be on the possible transfer of lease rights and obligations between GO plc and its subsidiary BMIT Technologies plc following the brief announcement that took place on 6 April.
While the upcoming announcements by the banks as well as MIA and GO will continue to shape overall sentiment and trading volumes, the results by the smaller companies are also important for the investing public. Following the various challenges faced by many companies over recent years, further confirmation of the post-pandemic recovery and overall financial strength of the majority of companies could continue to generate added interest towards the equity market.Print This Page Disclaimer
The article contains public information only and is published solely for informational purposes. It should not be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in this article. Rizzo, Farrugia & Co. (Stockbrokers) Ltd (“Rizzo Farrugia”) is under no obligation to update or keep current the information contained herein. Since the buying and selling of securities by any person is dependent on that person’s financial situation and an assessment of the suitability and appropriateness of the proposed transaction, no person should act upon any recommendation in this article without first obtaining investment advice. Rizzo Farrugia, its directors, the author of this article, other employees or clients may have or have had interests in the securities referred to herein and may at any time make purchases and/or sales in them as principal or agent. Furthermore, Rizzo Farrugia may have or have had a relationship with or may provide or has provided other services of a corporate nature to companies herein mentioned. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any security mentioned in this article. Neither Rizzo Farrugia, nor any of its directors or employees accepts any liability for any loss or damage arising out of the use of all or any part of this article. Additional information can be made available upon request from Rizzo, Farrugia & Co. (Stockbrokers) Ltd., Airways House, Fourth Floor, High Street, Sliema SLM 1551. Telephone: +356 2258 3000; Email: firstname.lastname@example.org; Website: www.rizzofarrugia.com © 2021 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved. This article may not be reproduced or redistributed, in whole or in part, without the written permission of Rizzo Farrugia. Moreover, Rizzo Farrugia accepts no liability whatsoever for the actions of third parties in this respect.
This article was produced by Edward Rizzo, Director at Rizzo Farrugia, which 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. The company’s registered address is at Airways House, Fourth Floor, High Street, Sliema SLM 1551, Malta.