Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
Incoming CH bought stock, with own money. Worth noting. £48k is not a lot, in my estimation, however neither is it a token £10k.
...which is 11% down on the 2018 share count
Bruce55 - yes- clearly stated in 2 June RNS that this $25m buyback has been effected. 101.335m shares now.
Yes, profit_thirst, I follow your thinking. One of the issues is that it's not simple for outsiders to know what a "normal" quarter looks like in terms of ARPU or revenue. My expectations are based on c. $1000 quarterly ARPU pre the ASIC impact, and on 35k new customers a quarter, with a slightly higher rate of lost/ retiring customers per quarter, such that the quarterly active users declines gently through 2022. Even on that set of cautious assumptions I'd be at 220p of 2022 EPS.
Yes, thanks, that is the consensus I was referring to; that of 21 May. Canaccord has since published numbers, which will be part of the share price coming back a bit.
Note that the Liberum 2022 EPS is 201c/143p.
The narrative at this sort of a point with Plus500 is always the same "they have lots of low end customers who churn quickly and the business will go back to making a pound a share". This fails to understand the business from a return on marketing investment perspective, because those saying such drivel haven't done the work.
Will, you do, of course, ask the right question. The company has never set future growth targets, and has always flattened the out year expectations. You might think this makes sense because volatility comes and goes, but that's not how the business works, since the high newsflow and volatility allowed the investment of a much higher marketing sum, more than twice that of 2019, and that continues to drive this year and 2022.
The market expects this to make $250m EBITDA this year. After Q2 it should be obvious that will be more like my $480m number. The company is likely however to come out with a lowball FY number in the Liberum note, thinking that any single quarter can be weak because of CTP.
Numbers will not, therefore, go from the current 159p of consensus earnings to the 228p which I have, but they could easily go to 180-190p, and I'd expect the stock to trade to 10x that number
The anchor on the stock will remain the 135p expectation for 2022 earnings. There are analyst notes out there on IG which point to possible blue sky upsides for IG if volatility persists. Some people get it, and understand that they are quite possibly fading earnings too quickly. In my case I have gently declining quarterly customer numbers through 2022, and still get to $620m revenues, $350m ebitda and 220p earnings. I have a 12% tax rate.
If this stock had better coverage, and proper communication of longer-term goals, then it would be > 2000p.
Hello all. The company will make its own calculations about how it communicates. One would hope that before too long they will do quarterly conference calls. The call a couple of days ago was in addition to the normal quarterly communications.
The call covered a lot of aspects. It didn't change my opinion on the company or the equity. The broking business will launch soon, gradually. Note that it will be advertised to the installed base, not just to active users. It will be both incremental revenues and an important extra funnel. Broking can be marketed in places CFDs cannot. It matters for brand. It will be called Plus500 Invest.
Development cost for the new US platform is included in the announced $50m R&D spend. We need to think of marketing spend there, and capital requirements, both ramping up alongside the revenues. The company sees US futures trading platforms as complicated and user-unfriendly, hence ripe for the Plus500 treatment, as it did to CFD trading a decade ago.
Clear intention to communicate the company to non-UK investors. New Non-Execs helping with this.
All the above is great, but the share price driver will be that it won't get to the end of June without hitting full year profits, in my opinion. Note that company-collected consensus is now $250m EBITDA for this year, or only $128m more than they earned in Q1.
It's a Liberum-hosted call for institutional investors, explained as being part of the service that Liberum offers its clients. It is nonetheless notable to me that they haven't done such a call before.
I do expect the company to be very close to the full year ebitda number.
Quite possible, re Q2.
Conference call just announced for 25 May at 2pm.
oh, and to make it clearer, we have to look at profits. In Q1 PLUS made $122m EBITDA . The average quarterly EBITDA expected in the rest of the year is $45m (company-collected consensus is at $256m for the full year).
Remember they brought 89k new customers in Q1.
Remember also that the sum of CTP over the last four quarters (Q2 20 to Q1 21 inclusive) has been -$196m, i.e. customers have been doing relatively well. The flow of cash from customers to Plus500 has been slower than normal for a year, as markets have risen. The average quarterly ARPU of the last four quarters has been below the level seen in the low-volatility 2019.
Matt - apologies - missed the absent t on that post, but my points stand.
Matt - Hello. As you know, your revenues at IG are about 76% of the gross customer revenues you make before hedging costs, and are relatively stable, and not much related to market direction. Your external hedging means you can accept big positions from serious customers, which really matters to the service you provide them.
Plus500 starts with 100% of its gross customer income. In 2019 it kept 93% of its gross customer income, and in 2020, 87%, buy which I mean its revenues as a percentage of Customer Income. The issue is surely that the quarterly volatility is high, with those percentages being 66, 101, 103 and 96 through 2019, and 135, 77, 90 and 46 through 2020. We know in addition that some of the intra-quarter moves have been huge. This is a problem, yes, but for me it's one of communication, not of business model. Every quarter IG pays away the best part of a quarter of its revenues to hedging counterparties. Plus500 does not, but has much higher revenue volatility as a result. Note also that IG has to keep a pile of capital as a result of having counterparties, and that recently this led to the company having to exit a load of markets.
IGG is expected to make £351m after tax this year to May 2021, or $482m. Plus500 made $500m after tax in 2020. In FY2010 Plus500's revenues were $24m. Last year they were $872m with customer income of $998m. They must be doing something right.
Key thing for me here is that these businesses, IG and CMC and PLUS, are all seen as 'Covid plays' which have had their moment. Few of us would expect as much volatility in 2021 as we saw in 2020, but who knows? In addition, the market is not great at understanding the growth which comes from new clients, even though IG and PLUS give you the numbers to work it out.
IG brought 32k new OTC clients in FY19, 71K in FY20 and 43K in the first half of this year to May 2021. That's growth.
Plus500 brought 91k new customers in 2019, 295k in 2020, and 89k in Q1 2021. That's high growth.
Plus500's consensus revenues are at $495m this year. It did $203m in Q1. That averages $97m in the rest of the year. Lower leverage under ASIC might take maximum 65% off 12.5% of revenues, so an 8% reduction to run-rate in the first quarter of the impact, but numbers remain hugely wrong.
In case anyone has missed this, there's a presentation accompanying this morning's acquisition and entry into the US futures market, on the Plus500 website.
Beauchamp- yes, you're right that it's great that Mr Price at Jefferies has got to 280c for this year, and flags that that number could be still higher, but it's also really important that he's gone from 190c to 203c for 2022. A massive beat in 2020 will happen, and I think earnings this year will be at least 300c, but lasting profits are what matters, in that this year is just one year.
I say that, but this year's profits will be > 20% of the market cap. of the company. Go figure....
We know this year's US cents EPS is Liberum 214, Peel Hunt 224, Jefferies 280, so if consensus is 223c, as the company just published, the Autonomous is at 174. That makes me laugh.
Jefferies upgrade. Now at 280c this year and 203c in 2022. PT raised from 1760 to 1850p.
Says that his work on lifetime value of cohorts implies revenue potential this year of over $700m if CTP broadly neutral this year and no worse than expect impact from revenue restrictions in Australia.
"Our assessment of the historical average lifetime revenue contribution per client applied to current and prior year cohorts continues to imply material upside to our base case and consensus"
It's not crazy at all. It makes perfect sense for them, just not for us.
This is understandably being categorised as a covid winner, with the expectation that retail trading subsides as people return to working in offices. I think this viewpoint misses that the business has also lost out from QE suppressing volatility and driving so many markets higher. It also the case that the company flagged that customers had done well in the first 6 weeks of the year, but that has no bearing on whatever happens next.
This morning's IG news and estimates changes show what happens at even a much better-covered stock when estimates have assumed that high trading volumes suddenly reduce. Part of what people fail to comprehend both with IG and PLUS is that the active customer base is much, much larger now.
Ghostrider- if I may, be careful on your EV. That is not unencumbered cash. The book is so big now that c. $400m net cash is needed to run the business. On the flip side, the market has yet to understand that the customer income that will flow from such a large book is above current revenue forecasts.
Beauchamp - the company is not considering anything of that scale. We know that stockbroking is coming in Q2, and I expect that to be complementary to the CFD offering, and to aid retention of the customers who matter, who are a very small percentage of total customers. We know there is another business line coming which is not a trading product, and that that will come later in the year. I suggest that we look to the company's existing technological competences when considering such moves, particularly their self-developed cashier system, which handles huge volumes in and out at very low cost.
No. The first announcement will be of stockbroking. They will be charging commissions. They already have the FCA permissions and have already updated Ts&Cs. The new business area which is not a trading product is to be announced later in the year. The company has mentioned the quality of the company's self-developed cashier software in this context.
As for M&A, bear in mind that the company says it needs $400m to back the business, which means all of regulatory capital, backing the substantially larger trading book, and some to back the stockbroking business, as I understand it.
"1) Will Plus lose a large % of the customers they won in 2020 in 2021? "
Yes they are very likely to head into 2022 with fewer customers. But we don't care about customer numbers per se, but revenues. 2020 revenues from those 296k new customers was not more than 20% of their lifetime value (it was c $170m, and 296k new customers times $3500 lifetime value = $1bn). The low value customers have shorter trading lives.
"2) Will book losses normalise (Plus traditionally wins c70-80% of the time v customers)? "
Yes. But you can't call when. It's not true however the Plus500 wins 70-80% of the time. Short-term trading, whether at IGG or CMC or here, is a 50/50 win/lose activity. It's the spreads charged that then means that 74% of customers lose money. Note that this ratio is the same for all three UK quoted CFD trading platforms because, on average, the deeper-pocketed IGG customers have no more skill than do those of Plus500.
"3) Perhaps a combination of both the above, but both Cannacord and Liberum are suggesting that Plus c2023 will be a materially smaller business than Plus c2020. I think we all agree it will be smaller , but it is very difficult for any of us to accurately gauge the level of decline at this point (its pure guess work). And, the current share price is hardly factoring in rampant growth, far from it."
The Liberum 2021 revenue number is guided by the company, as is normal for a house broker. I would suggest that if 2021 had not happened to start with markets shooting up, that number would now be higher.
"Sell-side analysts are not really paid to get it right, they are paid to generate commission. Plus is quite illiquid and doesn't need to raise money, hence the likes of Cannacord won't be able to make any money out of them. As a result it won't be a priority and the analyst is likely to be going through the motions. Which is fair enough as his bread is buttered elsewhere...But, like you say - possibly an opportunity for others who do follow the company a little closer."
Everyone is trying to make money, and the Canafraud note is clear and open on methodology. I believe however that it is extremely partial. It was right, so far, to be a seller of Plus500 from that point. The total absence, however, of any understanding of the business from a return on marketing investment perspective, even when the company has spoon-fed you the cohort numbers, is where, I believe, analysis which persists at the base level of "ARPU x (old customers - lost customers + new customers ) = revenue" will end up looking foolish.