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There's been a lot of focus in the chat about the treasury income and how to value Alpha. But it's worth thinking about it's growth prospects too. The land and expand strategy has great potential. As it is, London generates £35 mil of the FX revenue. With offices in several European countries, including Germany now, plus Sydney and Toronto, the hope is that these can replicate London's success - bearing in mind they still consider London in an early growth phase. They also reference using the Madrid market as a base for other Spanish-speaking markets, which could bring offices in south America into play. Longer term, there's no reason they couldn't expand into Asia, Africa, and the US. They've made a few mistakes (Toronto) but it's a learning experience and if most of these offices come good then there's probably scope for increasing revenue by 10-20x. If you think about where this company could be in 10 years time by doing little other than repeating a winning formula, it's really very exciting.
Great points @koolhead which I'll reply to when I have more time. There was no quote for more than 1k shares at £18 into close, so a breakout looks very likely tomorrow IMO.
I thought it was notable that they didn't mention their North American & Asian regulatory license applications in last weeks report, which we know were started at lease a year earlier;
"Whilst we are only scratching the surface of the European market, the service providers we are partnering with are global, and have already expressed a strong desire for us to expand our offering to North America and Asia. These regions are currently outside of our regulatory scope, but with the benefit of the interest tailwind, we have taken the opportunity to begin regulatory applications in the US and Singapore. These applications are just one such example of our accelerated investment in scalability that is being carried out to secure our global expansion. Providing these applications are accepted, this will open up new revenue opportunities for the business, from existing partners who have already shown a strong appetite to work with us in these jurisdictions."
I also spotted the below Prequin research which was released on the same day as our results;
https://www.globenewswire.com/news-release/2024/03/20/2849698/0/en/North-America-is-consolidating-alternative-assets-as-region-holds-almost-two-thirds-of-global-AUM-Preqin-reports.html
And finally linking to the commentary on the main market listing;
"As a business that is growing in size, becoming more global, and gaining interest from increasingly larger clients, we believe a Main Market Premium listing will serve to further enhance our reputation and support our market penetration as we move into new countries and engage larger clients."
To me it all points to a launch into the NA market in the very near future. It wouldn't surprise me in the slightest if it coincides with the May uplisting, it would make a lot of sense & explain the ~14 month lead time from first announcement of the move to it actually happening.
Entering the worlds largest alternatives market armed as a highly profitable business armed with £200m cash would certainly be very exciting, and I agree with @Koolhead's vision for a NADSAQ / NYSE listing in the medium term, once they are firmly established in the US and revenues are substantially larger.
There has been no online quote for 100 shares since 8.10am, no doubt due to the 5k buy above the ask at £18.45. Peel Hunt are advertising £18.40 on the offer, but there is nothing available. The real bid is £18.32 for size, yet at 8.43 Liberum saw fit to drop the advertised bid to £18...
The last time I can remember such an imbalance in liquidity was this time last year, shares promptly broke above the then £19.40 resistance on 6th April 2023 and didn't look back until they hit £23 resistance on 11th May.
Of course, fundamentals 1 year on are dramatically stronger, with an £84m increase in net cash (worth ~£2 a share), a 5 quarter track record of treasury income, an ongoing share buyback & imminent move to a FTSE premium listing. The macro picture is also steadily improving, with inflation seemingly tamed & interest rates stable, meaning conditions for business are much improved, which is of course positive for Alpha's underlying performance.
All in all, with a >15% FCF / EV yield, Alpha is incredibly cheap, which is almost certainly why liquidity has dried up... I think £25 a share would still be cheap, given FCF / EV yield would still be over 10%
Ps. Peel have finally moved off the offer, now it's NT for 100 shares at £18.45 with Invesco blocking online dealing. We're on the verge of a proper breakout IMO.
I agree. This has breakout written all over it. I just tried to buy a few but there's nothing available... I can sell at 18.50.
Can now buy at 18.80
I know they say boring is good but it's been boring for very long time. It looks like nobody is interested in British companies anymore and even UK ISA initiative haven't helped much.
Good to see we have broken out on the chart. I expect Alpha to perform quite nicely over the next couple of months. Catalysts inclyde:
> continued buy backs
>new tax year in April with fresh ISA money
>front running the main market listing in May
Congrats to those who saw the opportunity here and loaded up at the bargain basement prices.
Technicals and fundamentals both looking like they are aligning for a nice move here. I've accumulated heavily in the last couple of months, so I'm happy to sit back and see where it goes from here. Appreciate all the good analysis on this forum as always.
I usually don't do this but I just want to remind that few days ago Alpha transferred 234k shares from treasure to employee schemes so they could be back on the market sooner or later and the remaining 100k shares might be granted to directors after long advertised move to premium market. I'm still holding here but I'm simply not as excited, sorry.
@sheepy, the UK ISA hasn't helped much? It hasn't even been launched yet! It's likely to start from April 2025.
Alpha has suffered far more from fund outflows than the average LSE share due to the fact it was the most popular UK small cap stock in many fund portfolios. The outflows have been none stop for the last 24 months and Alpha has gone from being a highly rated (for the UK) growth stock on a PE of ~40 at the end of 2021, to a value stock on a PE of ~9x today.
Obviously some of this derating can be explained by Alpha's exceptional prudence with it's treasury income stream. Had the same product been created by 99% of other listed companies then I suspect it would have been dressed up very differently in the accounts and used to pump the share price so that certain parties could benefit. Not so here, which is a great sign for long term holders.
As @koolhead and others have posted over the last few weeks, I think it's fairly obvious that Alpha should continue to thrive over the next 5-10 years. On healthy stock markets like the US, Australia & Scandinavia, it is eminently feasible for £800m small caps to grow into £5b+ mid caps. In the UK it is exceedingly rare, with the only FTSE 100 examples in the last 8-10 years being Diploma, JD Sports & Dechra, (now acquired) . There are more success stories in the 250, with Games Workshop, Softcat, Greggs, Computacenter making it to ~£3b. Behind them you have the likes of 4Imprint, Globaldata, Keywords, Yougov & Alpha who have developed from sub £500m to where they sit today.
Alpha graduating from AIM and leaving market maker derived liquidity behind is a major step in the right direction. They'll need to get more analysts on board and start to provide more colour on medium term revenue & strategy, which should allow shares to reach fair value, i.e. valuing the business on the financial metrics it will produce in 3+ years time...
I think the main risk now is a low ball takeover offer from a US PE outfit, taking advantage of the ridiculous FCF yield that has been created by Alpha's prudence. By low ball I mean £30-35, which judging by recent M&A activity on LSE would likely get a thumbs up from the mainly short sighted bunch of UK fund managers.
My view is that this can be a £100 share in the next few years, perhaps sooner if European equity markets properly recover. That would only see it reach the low end of the FTSE 100. They certainly tick all of the right boxes.
For the last week we have closed each day on the intraday high, bodes well for tomorrow and next week. Lete hope this is the start of a move back to the mid 2000's prior to a move up to the main market in May! GL all
Nice to see the first £20 on the L2 order book spread, still trading at an EV/FCF yield of 16.3% & an EV/ Equity ratio of 2.8x vs the IPO to end 2022 average of 6.2x. A return to the historic average provides a share price target of £36.60 (and a much more sensible EV/FCF yield of 7.5%)...
See one of the private investors has done a revised analysis on Stockopedia including interest income in the key metrics indicating how ludicrously undervalued Alpha is - in reality on a P/E of 7 if you exclude the cash it holds. It’s starting to appear on punters radars….
Would you mind sharing the analysis or linking to it? Many thanks
It’s for subscribers only. Essentially saying the real eps is £2.06 rather than the company/broker view of it being 76p because Treasury income is excluded. Also as the company has £200m cash that needs to excluded when calculating the P/E leading to a P/E of 7. It’s essentially what we’re all aware if you know the real facts/figures rather than the presented ones.
Good to see the Stocko coverage, PI ownership here is abnormally low (HL & II clients only own ~2% of shares) so any sustained PI buying should be a favourable wind.
Alpha currently 2 analysts providing coverage, Liberum and one other that I can't locate the name of. Liberum are valuing the treasury income of a PE of 3 with the cash flow discounted at 9%... Most 250 stocks around Alpha's level have 6-10 analysts covering them, so we should expect to see several 'initiation of coverage' stories in H2. Where they place their price targets is likely dependent on how much info Alpha want to provide them, if they can get hold of some 5 year forecasts then look out!
I think there's a reasonable chance that the recent dip in the SP to the 15-18 range will prove similar to the one of summer 2020, which was followed by a long rally. I'm hoping the main market listing and growing awareness of how good a company this is will power this up to around £35 which strikes me as a more realistic valuation.
I think there is a good chance of that happening Koolhead. Resistance at £23 has been insurmountable since it was first tested in August 2021, when that is broken it should provide a major technical boost. Not having the quote driven, market maker controlled SETSqx system meddling with the price should provide a lot of positives, worth reiterating that it is currently almost impossible to buy share in Alpha if you are based outside the UK, you can place bids in the daily auctions but good luck getting filled for any size. All of that changes come next month and I suspect a lot of new liquidity will enter the market.
Surprising too see director sells though. Maybe it was just to raise some cash.
It is, and even more bizarre to report them on the day they announce the uplisting! I'm hoping that the propsectus will give some detail on number of shares held by PDMR's / staff, as it's a bit of an unknown right now. On that note, it would have been nice if they had disclosed how many shares / unvested options the MD was still holding.
Couple of quarterly data points should land in the next week or two; shareholder movements & average cash balances / interest rates for Q1. Interesting to see where shares head in the next couple of weeks as the change approaches.
Classic market maker driven false market right now - the advertised spread is showing £19.60-£20, when in reality it's £20 to sell and £19.99 to buy. It appears that they are desperate for shares, likely due to international buyers loading up whilst it's still under the radar. Would be excellent if we could crack the £23 resistance before moving to the main market (and clearly very much deserved when looking at the fundamentals).
Ps. I note Wise is on the verge of breaking £10, truly astonishing variance in the impact of treasury / interest income on market cap growth vs Alpha.
I was thinking the same, it's actually slightly cheap to buy then sell right now! Could this be about to take off, deffo seems like the MM's are desperate for shares IMO
Some serious trades going through today!
Certainly was, haven't seen that many delayed trades go through after the bell, certainly a massive tick up in volume, explains the decent tick up today and bodes well going forward. Someone was certainly accumulating in volume today. GL all