Revenues for Plus500 (PLUS) are no longer in freefall. On its own, that is not the foundation of a bull case, but given recent form, investors in the derivative trading platform will be full of cheer. Interim results, noting an improvement in second-quarter trading, promptly led to a surge in the share price. Hopefully any meta-spread betters out there went long ahead of time.
As a result, first-half comparisons with the final six months of 2018 – when tighter leverage limits for retail investors were introduced by the European Securities and Markets Authority (ESMA) – are more apposite than the year-on-year comparative. On this count, earnings per share only dropped 56 per cent, operating cash flow only declined by 72 per cent, and average revenue per client only fell 42 per cent. Either way you slice it, cash conversion collapsed as overheads failed to fall as fast as the top line.
Aside from the ESMA changes, low volatility in financial markets was cited as the chief culprit for these depressed figures. But volatility in Plus500’s own operations remains a constant. Compared with the first quarter of 2019, active customer numbers climbed 11 per cent in the three months to June, while revenues surged 75 per cent to $94.1m (£77.9m). Third-quarter trading to date means management expects to meet full-year forecasts.
Peel Hunt forecasts earnings of 112¢ a share in 2019, rising to 168¢ in 2020.
| PLUS500 (PLUS) | ||||
| ORD PRICE: | 683p | MARKET VALUE: | £774m | |
| TOUCH: | 683-689p | 12-MONTH HIGH: | 1,980p | LOW: 397p |
| DIVIDEND YIELD: | 10.8% | PE RATIO: | 6 | |
| NET ASSET VALUE: | 226¢ | NET CASH: | $327m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2018 | 466 | 346 | 230 | 137.86 |
| 2019 | 148 | 63.9 | 45 | 27.34 |
| % change | -68 | -82 | -80 | -80 |
| Ex-div: | 29 Aug | |||
| Payment: | 28 Nov | |||
| £1=$1.21 | ||||
