Member Info for ggplyr

What P/E ratio do you make it for CMC? last year was a bad year which was a bit of a blip. yr ending march 2021 is expecting to be a profit of 47m. So the forward P/e ratio is around 12.5 which looks far more normal.
The current year (ended march 2020) profit hasn't been reported yet although revenue has and is relatively high.

All in all, plus is the better bet imo.

Anyone know how to opt to not see posts from specific users?

The highest number of written google play reviews in a 1 week period during 2017 (crypto boom) was between 13/12/2017 and 19/12/2017, there were 110 google play reviews during this time
The 1 week period between 12/05/20 and18/05/20 has hit 136 reviews.

Parent company is WELLESLEY GROUP INVESTORS LIMITED
Products/current businesses:

Wellesley & Co Ltd
An investment platform.
Investing through the platform allows customers to invest in Wellesley bonds that are listed on Euronext Dublin.

Wellesley Finance Plc
A specialist SME property development finance lender.

Wellesley Secured
Finance Plc
Issues Wellesley Property Bonds. These bonds are used to acquire loans originated by Wellesley Finance.

I think new customers is still going very strong. Its been fairly steady around the 22k new customers each quarter until Q1 2020.
Written review of plus 500 on Google play has been fairly steady each quarter at around 190 (although some quarters do have larger swings)
Q1 2020 had 83k new customers & 298 written google play reviews.
Q2 2020 has 413 new customer reviews (until 15/5/2020 earlier today - when I looked at it)
There will be timing issue of new customers reported by plus and the review a customer does on play but id assume a review is done within a week or two if its going to be done.
Also appreciate there are fake reviews but I believe there will be a strong correlation between reviews and new customers.
Also appreciate this is only google play and so doesn't include Apple reviews.
I am not sure if these are only English reviews.

Jan 20 - 65 reviews
Feb 20- 79
Mar 2- 154
Apr20- 263
May 20 (Up to 15th of may) -150

well its not really a conversation/discussion that anyone can contribute to Denby... good luck with your bounce.

This is a very useful discussion by the way @ 14cr and simplethesis.

Thanks 14cr, that makes sense and I follow your logic, although not all the way. I think you are saying the 127m comes from prior years, but that makes revenue = profit = 437m which can’t be right. Although I get your point, I do like to be able reconcile these things to accounts though... that way you know its been audited.

I dont quite agree with zero cost after acquisition. E.g. further processing of payments in and out of customers accounts, customer support costs etc. which are incurred because of these already acquired customers, but sure the large costs will be to initially acquire the customers.

I also see so many plus 500 adverts on the likes of you tube that act as a reminder to an existing customer who might not have traded in a few months to go back and trade. However, wouldn't cost of this advert would be allocated to new customers only in the way they report marketing per customer? (I don't actually quite know whether it costs to advertise on youtube unless it results in a sign up but there are advertising streams that are more of a fixed cost e.g. Atlético Madrid. So an existing customer sees plus500 on Athletico madrid and goes back on line to trade...but the marketing cost isn't allocated to the existing customer)

I can't reconcile that slide.
2017 accounts:
Income = 437
income from operations= 258

Page 11 of presentation
the 2015 marketing generated 62m in 2017 accounts
the 2016 marketing generated 119m in 2017 accounts
The 2017 marketing generated 129m in 2017 accounts
this comes to 310m generated in 2017- which is higher that the income from operations reported.

Ideas?

Fair point

Hi Simple,
Re capex/opex - They report under IFRS and so IAS 38 would be applicable, if the platform development is material it can/should be capitalised, if they bring in contractors to develop rather than existing staff this becomes easier to see it should be capitalised. (This assumes a platform is significantly different to the existing one so it doesn't just fall under maintenance or small changes which would be opex.

Re smoothing dividends. I'm not sure anyone would be convinced by attempts to smooth. Id say profit is normally smoothed more sucessfully than dividends. But the balance sheet is too skinny to allow much profit smoothing so the huge cash balances would just stand out like a soar thumb.

Hi 14cr,
Your valuation method is correct. Although I confess, I also initially read it as you were multiplying 780 by 7.7 so it was probably just the way people skim read the maths. (Despite the layout being correct).
One could argue that the p/e used should be 7.7-1 i.e. 6.7 because the 780 includes one year of profit so you are doubling counting.

Hi Mark,

Ok yeah cant find much fault in your logic now :)
Although I'm not convinced on the acquisition cost being so low for the long term - from the most recent annual report "Average User Acquisition Cost (AUAC) increased on 2018 levels as the Group invested in marketing to acquire new higher value customers"

Now in the Q1 trading update its "Plus500's efficient marketing algorithms and improved conversion ratio have contributed to a sharp decrease of 48% in AUAC to $641"

Looks like to me they chase revenue and spend more to acquire more customers when needed... and the narrative is what ever sounds good to spin it.

@Mark

"Revenue for 2020 I'm pretty certain will be over a billion but say 950 (also discussed with professional analysts who agree) @ an operating margin of min 55% (*was 70% in 2018, 2020 could be >70% given lower ARPU and massive + in customers)
So 522m profit MIN/ 106.7m shares = $4.89 split 50/50 divi/buyb = 2.48 a share"

Use Profit after tax rather than operating margin if you are trying to calc divi...

That's for the share, although 564m seems very low! i'd say they have already hit that in the first 4 months as volatility has continued...

Big buy of 1m at the end of the day...

Hopefully you are right on the $1billion, I think if volatility continues for a couple more weeks which is likely then id say you could be right. I'm watching the stock market volatility index at the moment as a very crude indicator of revenue.

It was the last 6 weeks in Q1 that drove the boost, we haven't had the same volatility since then but its still nice and high... plus there is oil.

We have lots of years unlikely to be repeated then, stock market volatility hasn't been this high since 07/08. Oil prices have gone crazy. We aren't going to get another event like this for a few years. And agreed that 2019 was low volatility and increased regulation. Soon to have regulation in Australia (accounted for 15% of revenue in 2019). Likely to have more regulation in the UK as they aren't done targeting online gambling. Its a shame they don't give more info in their updates... given their strong cash generation just their cash balance at the trading update dates would be hugely informative.

We have some people who have lost jobs, other people who haven't lost their jobs have more disposable income because they have very little to spend it on so more for spread betting... who knows what a stable year looks like!

Not sure using a P/E ratio of 6 is meaningful when its driven by an exceptional, not to be repeated, year of activity because the earnings in subsequent years will not be the same once normal market volatility continues. None the less- a good update.

Think I left it too late to invest now. Their rolling 7 days average number of poker players have started to drop. its now at 1700, it was 1800 a couple of days ago. missed the boat!