As if the regulatory clampdown on the marketing and sale of spread-betting products was not enough to contend with, CMC Markets’ (CMCX) performance was also blunted by lower market volatility during the second quarter. Despite a 4 per cent increase in the value of trades, range-bound markets and increased inflows into lower-revenue yielding products meant contracts for difference (CFD) and spread-betting revenue declined by a quarter over the first half.
Active client numbers were down 4 per cent to 44,697, with the UK suffering the worst decline. That was partly due to higher wealth hurdles for applicants and appropriateness tests, introduced ahead of August’s spread-betting regulations. Revenue per active client also declined more than a fifth to £1,413.
However, there were some brighter spots. Under the white-label stockbroking partnership with ANZ Bank, 103 intermediaries were migrated to CMC’s platform. The deal has contributed 125,000 active clients – based on those that have placed a trade in the past year – and management expect this to contribute around £7m in pre-tax profits annually. An application for a new office in Dubai is also being considered by the regulator and management is in the early stages of applying for a South African licence.
Analysts at Peel Hunt expect adjusted pre-tax profit of £34.1m during the year to March 2019, giving EPS of 10.2p (from £60.1m and 17.1p in 2018).
| CMC MARKETS (CMCX) | ||||
| ORD PRICE: | 113p | MARKET VALUE: | £328m | |
| TOUCH: | 113-114p | 12-MONTH HIGH: | 210p | LOW: 110p |
| DIVIDEND YIELD: | 6.4% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 73p | NET CASH: | £17.2m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 102 | 29.8 | 8.7 | 2.98 |
| 2018 | 84.2 | 7.2 | 2.7 | 1.35 |
| % change | -17 | -76 | -69 | -55 |
| Ex-div: | 29 Nov | |||
| Payment: | 21 Dec |
