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Quite a week all in all. Possibly some profit taking next week (down to high 19's perhaps?) with a slow rebound back up to £23-£25 depending on investor sentiment etc imo.
It feels like the next natural stop is £25 but with a slight profit-take/downward pressure - in between, as you say. You called the £21.00. nice.
I'm guessing we'll breach 2100 then consolidate for a while. I guess the market will be watching progression of CFTC data to observe how the US business is developing. VIX is up 40% since end March, so that is broadly supportive too.
That's a fair challenge gglvr. I thi k we are on the same page. My aim is not to precisely value the business but to fotm a firm view as to whether buying at today's price offers a margin of safety. I think so.
What institutions overlook to date but will appreciate in time is the diversity of the business today, by geography, regulatory oversight, and product. PLUS does not need to hammer one particular market, such as UK CFDs, with marketing dollars to squeeze growth out at any cost whilst eroding margins. PLUS can be seen as a technology and regulatory platform which is truly global, thus targeting niche markets and segments all over the place at the same time, eeking out incremental clients and profits without depressing profitability. The next legs are US commodity futures, UAE, Japan, but there will be more after that, such as European derivatives.
This is why this is a sustainable growth business and is worth an ex Cash PE of >10x, in my view.
On valuation, personally I look at ex cash PE.
The market cap is USD2,000m
Unrestricted cash (non-regulatory) is around USD500m
Net income will be around USD300m
Ex cash PE = 5x
What is it worth? My view is that this business can maintain the profitability of its legacy markets while growing some new markets, so it is worth a minimum of 12x PE today.
That would indicate a fair value of 12 x 300 + 500 = USD4,100m or £42/share
I don't think there are any complaints here. The business is growing, just ramping up in USA, UAE, and elsewhere, is throwing off cash, and enhancing EPS through buybacks alone (at a very low valuation). This share is going to £30 in my view. The issue has always been converting Institutions to the story, so the journey to £30 will be incremental wins.
I'm definitely guilty of that too (and I've written about it at length on here - to the utter boredom of others I think!) Taverham. I think its the fact that once trust is broken it's very hard to win it back - the move to nasdaq might mean a new start (as it were) with no previous history to cloud people's judgment/sway their investment decision/continue the reticence to invest by the institutionals. Mind you, god help them if they fudge it on the nasdaq. It'd be brutal.
With the FTSE100 down 1.5% this is very impressive up 2.8%
BUY LONG STAY HAPPY
GLA
Oi -Oi , I think a listing on nasdaq is inevitable , myabe they will announce that move with the next results. Grossly undervalued because the city dont trust them!
Not saying you close the business down! If they did a really massive buy back they would use up cash valued by the market at 28p in the pound approx to buy shares on a pe of 7. They are doing this steadily but imagine if they did this in a big way what a massive impact on earnings that would be.
Ggplyr - it's not so much valuing the entire company off the cash, just that if you take the cash out of the equation (and I sort of calculate it that if Plus stopped dead tomorrow, what would they have in the kitty to pay out their investors - i take your point on needing $500mill to run the business ...........but i'm er, not counting it for my rudimentary thoughts!) is the rest of the company only worth $10 to $15 dollars (depending on differences of opinion in terms of how you value that cash). Surely their trading software package is worth more than? They've already proved it's massively scalable...........and think of the cost savings if someone else bought them (or they bought someone else actually) in terms of being able to subsume them and lay off all the workforce (nasty, but true). I was just trying to demonstrate my thoughts (ineloquently!) that Plus seems to be under-valued presently. If someone said to you - you can buy Plus now, without any cash on the books, for £12 a share you'd jump at it.
there are some novel ways of valuing the business coming out here.
beauchamp, yours makes no sense to me. lets say they sack everyone, keep their $950m and keep the interest income only as the business. how would you be willing to pay £20 per share? i hope not.
value intestor and oi oi, you cant quite value the business exactly how you describe, youre viewing all the cash as liquid and freely available to share holders, but its not. plus need $500m to operate as working capital. a more comparable way to look at it is to take $500m out of cash and pretend its stock/inventories & then do your *** packet calcs.
for avoidance of doubt... i still believe its well undervalued and a very strong business!
looking forward to the counter points ;-)
I can see Plus going all in on the US, joining NASDAQ etc - I'm sure they'd re-rate there (so why not here?) I've always been a pessimist with the way Plus BoD have done things in the past..........but surely now........let bygones be bygones and this should re-rate? Thoughts?
Cash may be able to earn 4 per cent net of tax approximately. If you only value that cash on the group pe of 7 that amounts to valuing cash at 72 per cent below the actual amount!
I calculate that share owners cash per share as at 31.3.24 is £9.68 using £1=$1.30 as an approximation. So the business, in my view, is valued by the market at £10.50 a share if you put the cash to one side. What terrific value. Only employs 565 people at the end of Dec 23, so turnover is more than $1M per employee. I never worked for a company that could achieve that leverage from its employees.
Also - if I divide the $985,000,000 million they've got in the bank by the 79,285,000 (approx) shares in circulation I get $12.40 per share. Surely the business is worth more than $8? (sorry, v basic maths, apologies).
Solid rather than spectacular as you say...............what they don't say is that perhaps Europe is slowing (in terms of acquiring new customers.............but is being replaced (or made up of) new customers from America. They don't split the geographical nature of nw customers............but I infer from their quote here 'The B2C (Retail) business performed extremely well during the period and continued to track ahead of management's expectations. Its contribution to new customers at a Group level is already not insignificant, reflecting the strength of its unique 'omni set solution' which allows customers to onboard, deposit and trade through one platform' that new customer's acquired would be below last year if it hadn't been for America. Cost to acquire customers has fallen (interesting to note) though so perhaps I'm wrong on that. Still, they are debt free and basically generating £100mill a quarter..........and the share buy-backs continue to eat into the limited number of shares out there. What's not to like?
Bearing in mind income from customer trading performance dropped from a wholly exceptional 50million down to 30, the underlying growth was excellent and volatility is picking up and estimates have to go up, leaving a consensus pe of around 7, I suspect. If you look at the business separately from the cash the pe is way lower.
Well, I’d say it’s decent, but far from spectacular. Given recent good run on the SP, I was expecting better, but perhaps being greedy. Liked the outlook for full year (well ahead of expectations), but the Q1 figures suggest slow, steady growth rather than anything explosive. Happy to hold, but more likely to take some profit and hold the rest, rather than add.
What are we all thinking?
For me - I think they'll announce some actual figures against the US market, which should be interesting in itself. And turmoil has always been good for Plus - I'm expecting there to be no surprises (because they'd had RNS'd them right?) on that front, showing progress across all parameters.
What a milestone.....................it's taken alot longer to get here than I (and perhaps others) ever thought but I'm guessing perhaps the fundamentals are more robust now (America being the main one imo).
Just through £20 it appears
Ok, got what your trying to convey.
I believe plus is well undervalued.
However, cash per share doesn't really imply the same. Firstly, they've been buying back shares so all being equal, cash per share of will go up. Second, all this really means is they are not distributing as much cash as they could. They've said they need circa 500mill dollars for working capital, so they could distribute another 400 right now via special dividend if they choose to.
As the business grows they will need to keep more cash though as working capital.
Sorry, the column headings are:
Date (yymmdd)
Shares outstanding in M
Cash in bank $M (that's owners cash, not client cash)
Cash at $1.30 = £1 in £M
Cash per share on balance sheet (owners cash) in £