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1April 2020

Argentex – Trading Update

Share Price 100p

Mkt Cap £113m

Conflict Disclosure:No Holding

  • Update –For the year to March revenue is up 30% to £29m, with 450 new corporate clients added. No issues with forward margins here and the company makes the point that it maintains its historic balance of currencies with 95% of the LLP’s portfolio comprised of dollar, sterling and Euro trades and a balance between spot and forward trades. The outlook refers to their credit worthy client base. The growth is sustained and the company is confident of meeting full year expectations.
  • Estimates – March 20 EPS expectations are for 8.7p which is PBT of £11.8m, a 41% operating margin. Going forward 11% growth in EPS is anticipated.
  • Valuation The shares have halved during the recent market falls. PE to March 21 is 10.9X and yield 3%
  • Conclusion Unaffected by COVID 19. Shares will recover strongly. 50% may be a reasonable expectation.

20 November 2019

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Argentex – H1 Results   

Share Price 173p

Mkt cap £196m

Conflict Disclosure: No Holding

  • Results Revenue up 41% year on year to £13.8m. Adjusted PBT £4.3m, equating to a margin of 46.2%. The company now has 932 active corporate clients with 210 new ones signed in the period. The increase in FX turnover was a modest 16% relative to the 41% increase in revenue, suggesting that the spreads have widened. Cash is £32m and the outlook is excited.
  • Estimates. Upgrades are 21% from the house broker Numis today. EPS goes from 7.1p to 8.7p for March 2020 and from 8.9p to 9.2p next year. Quite how 6% EPS growth can be forecast for next year when revenue growth is running at 41% currently is beyond me. Upgraded forecasts assume 4% revenue growth in H2 after 41% in H1. This looks too low by perhaps 30%
  • Valuation PER is 24.3X before 20% upgrades. Yield 1.2%. Given upgraded forecasts may well be 30% too low the shares are probably cheap.
  • Conclusion  These shares are the wrong price because forecasts are far too low. A similar argument applies to Alpha FX which allegedly trades on a PE of 40X.

7 October 2019

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Argentex Group – H1 Trading Update

Share Price 140p

Mkt Cap £158m

Conflict Disclosure: No Holding

  • Update Underlying revenues for this recently listed forex company were up 45% to £13.8m in the 6 months to 30 September. Performance was driven both by client numbers and currency volumes. This is said to “re inforce”confidence in full year estimates.
  • Estimates Forecasts to March 2019 seem to anticipate 20% revenue growth to March 2020 to £26.2m. Having delivered 52.7% of the full year number in H1 this looks very modest. Upgrades can be expected.
  • Valuation Per to March 2020 is 21.2X and yield 1.4%. 34% PBT growth is anticipated in the year to March 2021 bringing the rating down.
  • Conclusion Having come to market in June at 106p the shares are up 32% from IPO. Alpha FX trades at 29X June 2020 and Equals trades at 15.6X Dec 19. This FX space is a hot area and there is a way to run for all of these yet.