Medserv triples profit to €3m

The first week of this year's second quarter started off in a positive manner, with the Malta Stock Exchange index climbing to 3,605.175 points on Monday, from last week's close of 3,576.006. However, this gain was eroded in subsequent trading days, with a considerable dip on Friday, with the MSE index shedding nearly 1.50% over the week.

Notwithstanding its hefty downward moves since late January, the index is still 1.8% up this year. However, compared with most equity indices abroad, the underperformance of the local index has actually worsened. The indices of most foreign markets climbed moderately higher last week.

Volume traded last week was slightly above average, yet upon closer inspection, two-thirds of all shares exchanged were unusually concentrated in two equities, namely Fimbank plc and Maltapost plc. Simonds Farsons Cisk plc was another equity which saw unusually large trading volume. In all, just over 673,000 shares changed hands over 145 deals.

Trading occurred in 12 equities last week, half of which lost value, and two remained unchanged. The remaining four gained value, yet given their moderate capitalisation, their positive influence on the overall index was somewhat minimal.

Last week, Medserv plc approved its financial statements for the period ended December 31, 2009, to be submitted for the approval of shareholders on May 18, 2010. The group registered a pre-tax profit of just over €3 million, nearly triple that of last year.

The board of directors said it is cautiously optimistic that the company's forecasted projects this year will be realised and it expects its 2010 results to remain positive provided all these projects materialise and start on time. The board is proposing a net dividend payment of €0.135c per ordinary share.

Last week, the share price improved by 1.20%, yet trading volume was light.

The most traded equity last week was Fimbank plc, with nearly 236,000 shares changing hands over only three deals. This trading occurred solely on Tuesday, and resulted in a steep fall of the share price from $1.15 to $1.07, a new low for the year. Indeed, last week's 7% drop resulted in a shift from positive to negative performance on a year-to-date basis.

Maltapost plc was very heavily traded in every single session of the week, with 218,000 shares exchanged in 12 deals. Although initially the share price remained fairly flat, the price spiked by 2% in Thursday's session, soaring from €0.749 to €0.765, a price which was maintained and supported during Friday's trading. Maltapost plc remains one of the best performers year-to-date having risen well over 9% since January.

Trading in Bank of Valletta plc was fairly subdued last week with only 59,506 shares changing hands throughout the week. The share price held to narrow trading ranges yet closed the week 1% lower at €3.298.

HSBC Bank Malta plc was very minimally traded initially last week, yet succumbed to selling pressure in Friday's session, when the price fell from €3.248 to €3.15. This drop was also backed by the largest volume for the week, yet overall only 33,740 shares were traded throughout the week. The company announced on Friday that all the ordinary and extraordinary resolutions on the agenda were approved by the shareholders at its annual general meeting last Thursday.

A total of 55,000 Simonds Farsons Cisk plc (SFC) shares were traded last week, a much higher volume than in recent months. The share price was bid upwards, closing the week at €1.72, a 1.24% rise.

SFC announced that the board of directors had agreed to apply to the MFSA listing authority to the request the approval of a prospectus for the issue of €15m worth of unsecured and unsubordinated bonds redeemable between 2017 and 2020. Proceeds from the bonds are expected to be used to finance the bond to be redeemed this year, and for the group's general financing requirements.

Trading in Go plc was also somewhat subdued last week with only 30,000 shares exchanged. The share price remained static throughout the week, but fell by €0.005 to €2.175 on Friday.

Malta International Airport plc (MIA) was one of the few gainers last week, climbing nearly 1% yet on low volume. The share price closed Friday's session at €3.15.

MIA announced last week that the company registered a 12.3% increase in passenger movements over the corresponding month of 2009, resulting in an average increase of 8.9% for the first three months of 2010.

The share price of Grand Harbour Marina plc (GHM) shed 5% of its value and Lombard Bank plc's dropped by 1.3%. However, these price changes were backed by sporadic and minimal volume.

Last week, GHM announced that the board is scheduled to meet tomorrow to approve the company's final audited accounts for the year ended December 31, 2009, and to consider the declaration of a dividend.

Middlesea Insurance plc and International Hotel Investment plc remained unchanged. Trading in both these equities was also very subdued.

Nearly €280,000 worth of corporate bonds were traded, much lower than the average over the past months. Prices were generally unchanged except for the 5.6% Global Capital plc 2014-2016 bond and the 7.15% Melita Capital plc 2014-2016 bond which both rose just over 1%.

Continued preoccupations with sovereign debt issues in the Eurozone led to lower benchmark yields yet again, with continued corresponding increases in safe bond prices, including Malta Government Stocks (MGS). Trading in MGSs amounted to nearly €1.5m while €3.2m worth of Treasury Bills were traded.

This article, which was compiled by Jesmond Mizzi, managing director of Jesmond Mizzi Financial Services Ltd (JMFS), does not intend to give investment advice and the contents therein should not be construed as such. JMFS is licensed by the MFSA. The directors or related parties, including the company and their clients are likely to have an interest in securities mentioned in this article. For further information contact JMFS at 67/3, South Street, Valletta, on Tel. 2122 4410 or e-mail jmizzi@jmfs.net.