Alpha FX (AFX) may have been listed in London for less than a year, but it is already expanding into new markets. The currency hedging provider has traditionally catered to corporates, but it plans to launch an institutional business, which will typically focus on private equity providers and real estate and debt funds. It has also been hiring more foreign language speakers to gain a greater share of the European market.
After stripping out IPO-related expenses and share-based payments, operating profits grew by more than half to £6.8m last year. It increased its client base – which includes FTSE 250 companies – by more than a third, taking the total to 310. Winning bigger clients and undertaking larger trades underpinned the surge in revenue. Meanwhile, investing in its technology platform, as well as expanding into new markets, led to headcount increasing from 30 to 51.
Around 15 per cent of sales came from spot transactions, where hedging contracts have a duration of one or two days. However, the group focuses on winning business providing long-term hedging services, where it can add most value, says chief executive Morgan Tillbrook. These can last beyond a year, with cash received at regular intervals throughout the contract’s duration.
Analysts at house broker Liberum expect adjusted pre-tax profits of £8.3m for the year to December 2018, giving EPS of 20.9p (up from £6.7m and 17.5p in 2017).
| ALPHA FX (AFX) | ||||
| ORD PRICE: | 510p | MARKET VALUE: | £167m | |
| TOUCH: | 490-530p | 12-MONTH HIGH: | 570p | LOW: 217p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | 36 | |
| NET ASSET VALUE: | 67p | NET CASH: | £13m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016* | 8.5 | 4.3 | 13.4 | nil |
| 2017 | 13.5 | 5.6 | 14.2 | 3.4 |
| % change | +59 | +30 | +6 | - |
| Ex-div: | 12 Apr | |||
| Payment: | 16 May | |||
| *Pre-IPO | ||||
