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With some recovery in the air yesterday it may be worth checking for laggards


It seems the market is betting on a continuation of Q4 19 flow trends

Plus 500 – Q1 Results

Share Price 1108p

Mkt Cap £1,186m

Conflict Disclosure:No Holding

  • Update – Q 1 revenues up 487% to $316.6m. EBITDA $231m. That is a 73% EBITDA margin. Cash balances $515.6m. FY 20 results expected to be substantially ahead of expectations.
  • Estimates – The full year EBITDA estimate was for $228m and the company has delivered a little in excess of that in Q1. Forecasts have been downward sloping for 2021. I had expected that perhaps Plus may deliver 2-3X the market estimates this year but the Q1 run rate is 4X
  • Valuation If forecasts doubled that would equate to c 300c. That would put the shares at 4.6X.With a 60% payout ratio that would provide a yield of 13%.
  • Conclusion Shares are the wrong price. Well done to the directors for buying so many.

Alpha FX – Placing

Share Price 695p

Mkt Cap £258m

Conflict Disclosure: I Hold

  • Update £20m fund raise by ABB at 680p/share. Post the raise this will leave the company with £35m free cash on its balance sheet. Fund raise is to help the company acquire new clients and continue investment in Alpha Payment Solutions, Netherlands and Canada.
  • Valuation 25X Dec 19 EPS which is expected to be similar in 2020
  • Conclusion In my view Alpha FX has a strong sales culture but I am concerned that the other factor responsible for the fast growth is providing forwards at too low a margin price which is why the company needs capital. This fund raise would appear to endorse that concern. It is easy to grow providing risk capital at the wrong price.

Impax Asset Management – Q2 Update

Share Price 300p

Mkt Cap £391m

Conflict Disclosure: No Holding

  • Update Net inflows were 6.6% (£1.1bn) in the 3 months to March while the market headwind was 17.2% resulting in £14.4bn AUM.
  • Estimates AUM is now 8% ahead of March 19 while estimates anticipate 12% EPS growth to September 2019. It would be quite an achievement to not suffer a downgrade in the current market
  • Valuation EV/AUM 2.6%. PE 23.3X Yield 2.4%
  • Conclusion My concern that investment in green assets can be highly cyclical has proved unfounded so far as momentum continues.  The valuation of the shares is anticipating the momentum will continue.

Other News

  • PCF – Paying dividend as it is a legal debt to shareholders
  • Urban Exposure – Postpones general meeting to delist the company and launches legal action for breach of contract against the acquiring company and Pollen Street, Honeycomb and Shawbrook.
  • Nucleus Results in line with expectations. At £7.9m EBITDA. Q1 net inflows accelerated to 1.9% of AUA.

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