Overview of Q3 updates

In last week’s article I detailed the strong recovery being witnessed by Malta International Airport plc as evidenced in the Q3 trading update provided to the market.

Over recent weeks, a few of the other companies whose equity is listed on the Malta Stock Exchange also provided key financial figures covering the third quarter of their financial year. Announcements of this nature are important communication tools that go beyond the obligatory publication of the interim financial statements and the annual report. As I had reported regularly over the years, the publication of these additional company announcements on key developments during the first half of the year and also prior to the year-end were among the statutory requirements for all companies with an equity listing for a number of years. However, this obligation was removed at the end of 2015 and unfortunately only a few of the companies maintained this important level of communication since then.

In the banking sector, the Q3 information provided by three of the banks showed the evident signs of the initial positive impact arising from the new interest rate environment. In fact, Bank of Valletta plc announced that during the first nine months of 2022, overall revenue increased by 16.8% to €202.3 million. When excluding the effect of the settlement of the Deiulemar claim in May 2022 amounting to €102.7 million, the BOV Group’s profit before tax amounted to €47.8 million, which is 3% higher than the same period in 2021.

HSBC Bank Malta plc reported that pre-tax profits during the first nine months of 2022 rose considerably to €33.5 million compared to €25.2 million in the same period in 2021 as the growth in revenues and a material release in expected credit losses which amounted to €10 million offset the increase in costs.

APS Bank plc also reported a very positive improvement in profitability from a bank perspective only, since the overall Group results were impacted by adverse movements across local and international financial markets. In fact, on a standalone basis, APS Bank registered a net profit of €14.2 million which is 37% above the net profit of €10.4 recorded in the corresponding period in 2021 mainly as a result of the 15% growth in net interest income. However, from a Group perspective, a net profit of €0.9 million was registered during the past nine months following the loss of €8.41 million in non-interest income in relation to the performance of APS Funds SICAV.

Apart from MIA and the three banks, the other companies that provided updates on recent key financial developments are International Hotel Investments plc, Malta Properties Company plc and MedservRegis plc.

In line with the strong recovery across the tourism and hospitality sectors, last week International Hotel Investments plc did not publish its Q3 figures but for the second time since end of June, the company upgraded its forecast for the year. IHI is now expecting to generate revenue of €232 million which is 3.6% higher than the forecast published in early September and 6.9% above the revenue forecast of €217 million originally published in the Financial Analysis Summary on 30 June 2022. Moreover, EBITDA is now forecasted at €49.1 million (+12.9% over its September forecast), which translates into an improved EBITDA margin of 21.2%. IHI explained that the Corinthia Hotel London is the main performance driver as it managed to exceed its 2019 performance due to higher average room rates. IHI also gave an update on a number of ongoing projects in various jurisdictions. However, no mention was made on any progress registered with respect to the Term Sheet with the United Development Company of Qatar for a possible subscription of shares in IHI. This is another important development that would hopefully be successfully concluded by the end of the year.

Malta Properties Company plc reported that its revenue surged by 11.3% to €3.04 million reflecting the initial income from the Zejtun property and contributions from the MIB Building in Ta’ Xbiex which was acquired earlier this year. MPC registered a 19.3% rise in operating profit to €2.21 million.

Following the extremely challenging conditions over the past three years which materially dented sentiment across the Maltese investing community, it is indeed disappointing that other companies have not adopted a more open line of communication with the market. All equity issuers in Malta should replicate the effective investor relations strategy adopted by companies listed on the more developed capital markets overseas. In this respect, not only should key financial highlights be disclosed regularly, but an additional initiative should be undertaken to publish a ‘pre-close trading update’ shortly after the end of a company’s financial year. This will help investors assess the overall financial performance ahead of full details becoming available through the publication of the annual report which generally takes a number of months to publish.

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