Against the backdrop of UK regulatory uncertainty, diversification is a sensible strategy for spread betting and contract for difference specialist CMC Markets (CMCX). The group expanded geographically during the six months to September 2017, as well as opening a new office in Shanghai in October. Meanwhile, take-up of its institutional product – which allows intermediaries to trade clients’ money via an API link – has also increased. Revenue here was up 45 per cent to £15m, as the average value of client trades almost doubled.
Active client numbers – defined as those that have traded or held a position during the past six months – dipped 2 per cent. That followed a spike in new customers around the time of last year’s referendum. However, a 22 per cent increase in average revenue per client offset this, pushing up the total value of trades up more than a quarter to £1.2bn.
Given that one of the Financial Conduct Authority’s proposals is to limit leverage for inexperienced investors, which are typically lower value, an increase in higher-value customers is positive. Chief executive Peter Cruddas says around 80 per cent of its net income is generated by 20 per cent of active clients. The UK and Ireland segment led the way in terms of revenue per client, which was up 31 per cent to £2,860.
Analysts at Peel Hunt expect adjusted pre-tax profit of £49.4m during the 12 months to the end of March, giving EPS of 13.9p (from £48.5m and 13.6p in 2017).
| CMC MARKETS (CMCX) | ||||
| ORD PRICE: | 178p | MARKET VALUE: | £513m | |
| TOUCH: | 174-178p | 12-MONTH HIGH: | 201p | LOW: 94p |
| DIVIDEND YIELD: | 5% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 71p | NET CASH: | £23m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 88 | 18.8 | 5.1 | 2.98 |
| 2017 | 102 | 29.8 | 8.7 | 2.98 |
| % change | +16 | +59 | +71 | – |
| Ex-div: | 30 Nov | |||
| Payment: | 22 Dec |
