US Edition Plus500
213p29½
Questor says BUY
AIM-LISTED trading company Plus500 said yesterday that revenue for the year ended December would now be significantly ahead of market expectations, sending shares soaring 20pc.
The company said that trading during the last month had remained strong and has already exceeded market expectations for the full-year.
In the nine-month period ended September, Plus500 said it had more than 62,000 customers actively using its site, up from 52,000 in the same period last year. These customers on average are also spending more. Revenue in the first nine months ended September increased by 52.7pc, to $64.7m (£40.4m).
Broker Liberum Capital now expects full-year revenue of $100m and pre-tax profits of $46.5m, giving it earnings per share of 30.42c, or 19p. That places the company on a P/E ratio of 11.6 times, falling to 10.7 times next year, a significant discount to sector peers on an average P/E ratio of 17.8 times.
The company operates a trading platform that is based online and accessible through mobile devices and computers. This platform allows punters to make bets on the financial markets. The bets are made through something called a contract for difference, or CFD.
An example of a CFD would be to agree a contract, or bet, of £10 for every point the FTSE 100 rises — the difference. If the FTSE 100 rises by 10 points from the point the bet was made to the market close, the gambler makes £100. If it falls 10 points, they lose £100.
Plus500, based in Israel, is still majority-owned by management. Being Aim listed it represents a high-risk option. But if the audited numbers back up the figures in this trading update, the growth and dividend potential of this company, backed by cash generation, is compelling.
Plus500 is proving profitable. It reported interim profits of $15.4m, supported by operating cash flow of $15.7m. “We plan to return more than half of all profits to shareholders in the future,” said Gal Haber, chief executive.
Questor recommended buying at 147p on October 18. Readers have since enjoyed 45pc returns, we retain that view. Buy.