- Woodford Yesterday the FCA published an update on Woodford Equity Income Fund suspension detailing the standards it expects and in particular addressing the commentary around listing stocks in Guernsey which is deemed an “eligible market”. Unusual.
- TBC Bank Capital Markets day today. The RNS this morning entices with Georgian Wine tasting. I suspect there will be animated compliance officers up and down the land.
- Sky news reports that Standard Life Aberdeen is to buy Grant Thorton’s wealth advisory business for £30m.
CMC Markets – FY Results
Share Price 89p
Mkt Cap £258m
Conflict disclosure No holding
- Results Grant Foley’s final set of results as CFO today show net income down 30% to £131m and PBT down 89% to £6.3m which is EPS of 2p the same as the 2p dividend. Number of trades down 6% and value of trades down 13% but it’s the revenue per active client down 30% to £2,068 which is more significant. Revenue run rate early in current year is in line with expectations. Chairman’s statement says this is not a time to reduce costs so costs are expected to be higher in the current year.
- Estimates Consensus was for £9.1m PBT to March. Going forward £27.2m is expected to March 2020 which is a 17.6% PBT margin. The Australian white labelling operation resulted in £15m revenue in H2 so including that for a full year could add £15m revenue in 2020. Revenue forecasts assume an £18m increase in 2020 to £154m. With £124.5m of costs in 2019 likely to rise the £27m forecast PBT looks optimistic. Dividend is expected to be maintained.
- Valuation PER 11.2, yield 5.9%. IG Group trades at 12.2X and yields 7.7% while Plus 500 trades at 6X with a 15% yield
- Conclusion At a time of stress all three companies in this space are maintaining their costs to grab market share seeing it as a time to build. IG Group’s strategy update clearly stated they expected to increase revenue by 30% by 2022 which is a more aggressive strategy than CMC appears to be. CMC talk of a more diversified business. I suspect IG will take more market share.