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Why did The Times reproduce statements that do not reflect the bank’s position? Is it part of a strategy contemplating a sale at a time when there is growth potential! Stephen Muscat comments
In a two-step approach, first through an announcement in The Times and later on in the day through a formal company announcement, on Thursday the investment community got to know that government renewed its agreement with Capitalia by six months for the joint sale of shares in Bank of Valletta.
This is not how large shareholders should respect their 18,000 fellow partners in BOV.
The article of The Times gave this important piece of information and included a synopsis of what was stated by the BOV chairman in an interview published early last May in the same newspaper.
The article in The Times was unique since the extract repeated in this week’s edition was the statement that BOV is an expensive bank. Chalmers had queried then whether any international financial institution would be ready to buy in BOV at 30 times earnings when international banks trade at 11 to 14 times their earnings.
When the interview was published in May the editorial of The Times, by coincidence also tackled the same argument.
Reproducing a four month old statement now is misleading. The scenario has now changed.
In May, BOV was trading at Lm4.90 and the historic price earnings ratio on the full year September 2005 figures was 30. Chalmers had even expressed that 20 was a high price earnings ratio for a Bank by international standards.
But the scenario now has changed dramatically. Since then, BOV’s share price has gone down by 28% and is currently trading at Lm3.57. Considering this current share price and the September 2005 financials, the P/E ratio now stands at 20/21. This would still be termed high by the current BOV Chairman.
Time has passed and BOV has now issued its interim results for March 2006 which show that the Bank has registered a profit increase of 92% reaching Lm18.8 million pre-tax and an earnings per share of 11c7.
If the interim EPS is annualised and considering the current share price, the P/E ratio will stand around 15 times together with a dividend yield of over 5.3%.
Now, do you think an investor does not consider this a good investment proposition?
If BOV’s income and profitability continue to rise and there will no longer be any further non-recurring high impairments experienced in the last years then the best is yet to come!
Why did The Times on Thursday reproduce statements that do not reflect the bank’s position today? Is it part of a strategy contemplating a sale at a time when the growth potential is there!
For some investors this is a déjà vu.
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