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Plus500 enjoys new business surge, albeit at a cost

The CFD trading platform provider grew customer numbers as investors clambered to take advantage of post-referendum volatility
September 5, 2016

Plus500 (PLUS) is bouncing back after last year's UK compliance mishap, which resulted in the temporary suspension of some customer accounts. Trading during the first half of the year ended on a high due to added market volatility brought by the referendum. The Israel-based group - which allows customers to take long and short positions on a variety of market instruments via contracts for difference - gained 1,600 new customers on the day the results were announced alone.

IC TIP: Hold at 712p

Active customers grew 12 per cent to more than 104,000 in the period, thanks to a mix of new business growth and some customers reactivating their accounts. This also helped the group increase its UK market share to 18 per cent from 15 per cent during the prior six-month period. However, a surge in new accounts, roughly 19,500 in advance of management expectations, resulted in $26m of additional set-up costs. This suppressed cash profit margins, which declined to 37 per cent from 44 per cent the previous year. After deducting customer acquisition costs, margins would have been more than 50 per cent, although the improved customer numbers should benefit sales and margins during the second half.

Analysts at Berenberg expect net profit of $115m for the 12 months to December 2016, giving EPS of 100ȼ (from $97m and 84ȼ in 2015).

PLUS500 (PLUS)

ORD PRICE:711.5pMARKET VALUE:£818m
TOUCH:711.5-713.5p12-MONTH HIGH:755pLOW: 269p
DIVIDEND YIELD:9.1%PE RATIO:11
NET ASSET VALUE: 78pNET CASH:$96.2m

Half-year to 30 JunTurnover ($m)Pre-tax profit ($m)Earnings per share (ȼ)Dividend per share (ȼ)
201512752.13521.21
201615958.53923.24
% change+25+12+11+10

Ex-div: 15 Sep

Payment: 17 Nov

£1=$1.33