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2 NEWS PAUL COCKS BECAUSE of the ramifications brought about by the Coronavirus, investment advisors and stockbrokers Calamatta Cuschieri have reviewed their coverage on Malta International Airport plc and maintain their Hold recommendation, with an updated price target of €5.87 from their previous target of €7.18. During the local sell-off experienced in March, MIA's shares dropped to a low price of €3.52 per share. Airport activity was brought to a com- plete halt as from 21 March, the date when the local Government banned all commercial flights as part of the strict measures enacted to contain the virus spread. In fact, the airport handled less than 10,000 passengers during Q2 2020, a sig- nificant drop compared to the same quar- ter last year, where the airport recorded north of two million passengers. is significant drop in business activity led MIA to shelve its €100m masterplan, although the airport will continue on its €20m multi-storey car park investment, which is expected to be finalised by end of 2020. In view of these factors, Calamatta Cus- chieri excluded the masterplan project from its valuation, including the antici- pated future growth that was expected from this investment and delayed the completion of the multi-storey car park by six months (previous expected com- pletion date was mid-2020). Signs of recovery started to emerge with MIA re-opening its doors on 1 July, in line with the easing of lockdowns around most European countries. Additionally, the EU has now started to open its borders to non-EU countries , accepting incoming passengers from 15 countries outside the EU27. Despite the easing of restrictions, pas- senger numbers are well below pre-pan- demic levels, with MIA's CEO predicting that, "under a best case scenario, tourist passenger numbers will not return to pre-pandemic levels until at least 2023." is is in line with expectations of the EU as published in its tourism quarter review, European Tourism: Trends & Prospects (Q1/2020). Calamatta Cuschieri assumed passen- ger numbers to start recovering from 2021, and gradually reach pre-pandemic levels in 2023. is reasoning was also applied to the retail and property seg- ment, which is also dependent on the Airport's activity. Downside risks to Calamatta Cuschie- ri's price target include further deterio- ration in activity due to the resurgence of coronavirus cases, including a potential second wave over autumn and winter. is includes the possible reimposition of lockdown measures around the world, which will further hamper the current economic recoverability. Additionally, a delay in the development of a COVID-19 vaccine will drag further the current unprecedented situation and interrupt the recovery process. Furthermore, passenger traffic might take longer than 2023 to recover to pre-pandemic levels, coupled with the consequences brought about by an eco- nomic recession should the current eco- nomic activity deteriorate further. is might potentially result in a low- er number of expats and business trips, which will decrease both passenger traffic and business generated from the Airport's retail and property segment. Despite the downside risks to its valua- tion, Calamatta Cuschiri expects MIA to positively benefit from its monopolistic position when it is compared to its Euro- pean peers. Furthermore, it anticipates that the neg- ative consequence ensuing from this out- break will reverse in the short to medium term, accordingly it expects the demand for the aviation industry to recover once the current situation stabilises. Based on this, the company opted to maintain its terminal growth rate of 3% post 2025, with a 7.3% discount rate. At the current price level, Calamatta Cuachieri is of the opinion that all the accentuating factors mentioned, together with the fact that the Airport entered this pandemic from a strong point including a healthy cash position and debt-free bal- ance sheet, justify a Hold recommenda- tion on MIA's shares. Stockbroker maintains MIA Hold recommendation, revises price target to € 5.87, down from € 7.18 23.07.2020 DURING 2018, an increase in total expenditure on Research and Development (R&D) activ- ities of €8.7 million, or 13.2%, was registered. The Business Enterprise sector contributed to 63% of total R&D, whereas the Higher Education and Gov- ernment sectors contributed to 35.9 and 1.2% respectively. R&D expenditure was primar- ily dedicated to Basic Research, which accounted for 52.2% of the total in 2018, followed by Applied Research (33.3%) and Experimental Development (14.5%). In 2018, all three sectors re- ported an increase in R&D ex- penditure compared to 2017. The increased expenditure on R&D was triggered by higher outlays on recurrent expendi- ture of €7.5 million, as well as by an increase in capital ex- penditure of €1.2 million. La- bour costs represented 67.9% of total R&D expenditure, fol- lowed by recurrent expendi- ture (24.3%) and capital pro- jects (7.9%). In 2018, the highest R&D expenditure was recorded in Engineering and Technology, which accounted for 41.9% of total expenditure, followed by Natural sciences (27.1%) and Medical sciences (13.6%). Year-on-year comparisons show that the highest increase was registered in Natural sciences (€5.7 million), fol- lowed by Social sciences (€1.4 million). The majority of the R&D ac- tivity in Engineering and Tech- nology and Natural sciences was undertaken by the Busi- ness Enterprise sector, whereas research in relation to Medical and Social sciences was mainly carried out by the Higher Edu- cation sector. Each sector mostly funded its own research, supplemented by foreign funds, mainly Local business enterprise funds for the Business Enterprise sector, General university funds for the Higher Education sector and EU funds and Direct gov- ernment funds for the Govern- ment sector. Foreign funds for R&D reached €6.6 million, or 8.9% of total funds. R&D Employment In 2018 2,502 employees were en- gaged in R&D work, of whom 1,510 spent a proportion of their time on R&D projects, while 992 employees dedicated their entire working time on R&D. The highest R&D em- ployment was registered in the Higher Education sector, with 1,329 employees, followed by the Business Enterprise sector, with 1,090 employees. Male employment was predominant among researchers and tech- nicians. Females accounted for 35.6% of total R&D employ- ment. With regard to R&D em- ployment by major fi eld of science, in 2018, the highest employment was recorded in Engineering and Technology, with 730 employees, followed by Natural and Social sciences, with 702 and 450 employees respectively (Table 7). R&D Government Budget Allocations In 2019, Government budget allocations for R&D (GBARD) amounted to €29.9 million, an increase of €4 million when compared to 2018. The highest GBARD out- lays were recorded in the so- cio-economic activities related to Health (€6.2 million), Indus- trial production and technolo- gy (€5.5 million) and Political and social systems, structures and processes (€5.1 million), Total R&D expenditure in 2018 reached €74.6m

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