19th Aug 2024 10:31
(Alliance News) - Plus500 Ltd's increased guidance was a "clear sign of confidence" for a company that continues to strengthen, an analyst on Monday said.
The London-based fintech group and trading platform operator said it expects full-year results to be ahead of expectations after "excellent" financial, operational and strategic progress in the first-half.
Plus500 shares were up 4.1% to 2,532.00 pence on Monday morning in London.
In the six months that ended June 30, Plus500 said pretax profit rose 5.0% to USD183.7 million from USD174.9 million a year prior. Revenue climbed 8.1% to USD398.2 million from USD368.5 million a year earlier.
Customer income rose 8.2% to USD329.4 million from USD304.3 million, driven by stronger customer acquisition and increased trading activity of existing customers during the period, the firm said.
Plus500 flagged continued "excellent progress" in the US market, with both the business-to-business and business-to-consumer businesses performing strongly.
"The group delivered strong operational results, with an increase in new and active customer numbers year-on-year, enabled by its proprietary marketing and customer acquisition technologies," Plus500 said.
"The group enhanced its operations in the strategically important and highly attractive US futures market and its US businesses continued to excel."
Plus500 said it remains confident about performance for all of financial 2024 and beyond, driven by the strength of its position in growing end markets and its successful growth efforts in the US, Japan and UAE markets.
"As a result, the board anticipates that Plus500's revenue and [earnings before interest, taxes, depreciation and amortisation] for the current financial year will be ahead of current market expectations," it said.
Plus500 said current expectations for 2024 revenue are USD697.8 million and Ebitda are USD314.6 million, based on Bloomberg consensus forecasts.
The firm said it was in a strong financial position with cash balances exceeding USD1 billion for the first time.
Reflecting this, and the strong financial performance, Plus500 declared an interim dividend of USD0.4686 per share, up 14% from USD0.4100 a year prior. It also declared a special dividend of USD0.5314, up 66% from USD0.3200 previously.
In addition, Plus500 announced a USD110.0 million share buyback, comprising an interim buyback programme of USD35.4 million and a special buyback programme of USD74.6 million. These will start following completion of the existing programme, which was announced back in February.
"Guidance increases again, which, from a conservative management team, implies high confidence in beating current consensus," analysts at Jefferies said.
The broker noted that "importantly", the customer income figure is up 8% on a flat active customer count of 175,909 which "gives confidence in the core offering".
Jefferies said the quality of the customer roster is attested by a 30% increase in average deposit to USD8,400 year-on-year and the fact that 64% of over-the-counter revenue comes from customers of over three years on the platform.
"The Japanese and American operations are gaining traction, which bodes well for the full year results, and an increase in guidance to "ahead of current market expectations" is a clear sign of confidence," Jefferies added.
The broker expects free cash flow and distribution yields to remain strong, high teens, with cash to remain the biggest balance sheet item, 55% of current market value.
Jefferies said its discounted cash flow estimate provides a 2,800p share price target, 8.1x its 2024 earnings per share.
"For a business with a high-teens distribution yield and no debt, that does not seem a stretch to us. Recent entry to the US market, both retail and institutional, is exciting, and we expect the full-year results will give the market some more specific details to bolster enthusiasm. No company listed in London has provided higher distributions over the last decade, and Plus continues to strengthen," it continued.
The broker retains a 'buy' rating on Plus500.
By Jeremy Cutler, Alliance News reporter
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Related Shares:
Plus500