Argentex shares slide on market slowdown

Currency management group Argentex (AGFX) is most obviously in demand during times of turbulence for sterling. Despite the recent wave of global monetary tightening, the currencies of most major economies have remained stable – with the pound trading in a tight range against the euro and the US dollar for much of this year.

However, these conditions do not appear to have dampened interest in Argentex, which assists its customers with foreign exchange transactions related to their business needs. The group reported an 8 per cent increase in the number of clients utilising its trading services in the six months to the end of June, as well as revenue and profit expansion. 

Perhaps more importantly, it also recorded an 18 per cent increase in revenue per client traded, which management said indicates it’s attracting “higher quality” business. According to a statement from chief executive Harry Adams, although the group’s core business remains strong, the contribution of new products enabled it to grow under more challenging market conditions.

Among these recently launched offerings is its Alternative Transaction Banking service, which allows clients to collect, hold, pay and manage their currency exposure. New products now account for 15 per cent of revenue at Argentex, as opposed to just 9 per cent in the first half of 2022. 

The board expects the group to trade in line with its expectations for the full year. However, the half-year results also revealed a reduction in market activity in the group’s institutional and European divisions, with the stock sliding over 10 per cent in response. 

The shares now trade on just under 11 times projected earnings – and we’d say the company’s track record of resilience bolsters the investment case at this price. Buy. 

Last IC View: Buy, 122p, 12 April 2023