Markets
It has been quick. The index is up 15.7% from its low in October. The is up 7.2% and it is now becoming hard to find positive stock ideas. It is striking that while most people don’t believe they will be better off according to this Edelman Trust survey of 32,200 adults in developed economies such as The UK and the US the stock market disagrees. 56% of respondents globally said that capitalism in its current form does more harm than good. Distrust of capitalism was 53% in the UK and 69% in France.The 1920’s markets followed a similar pattern to the 1980’s and it was driven by debt in the 1920’sToday there is cause for concern for similar reasonsIG Group (LON:) – H1 Results
Share Price 686p
Mkt Cap £2,533m
Conflict Disclosure: I Hold
Results Revenue was up 1% to £252m. An 11% increase in costs leads to operating profit down 11% to £100.1m and PBT down 10% to £101.2m. EPS down 10% to 22.4p. Trading revenue was down £1.1m as the prior year benefitted from 2 months prior to ESMA intervention. DPS 12.96p. Core markets revenue declined 6% while significant opportunities grew 43%. Net cash £297m. Outlook reiterates the return to revenue growth in FY20 and the increase in costs being in line with expectations, while the previous strategy of 3-5% core markets growth and extra £60m from significant markets by 2022 is also reiterated.
Estimates Last year the company guided to £620m revenue in 2022 at their strategy day. Consensus is for £574m revenue in 2022 so there is some forecast upside over the next 2 years but today, with profits declining 11% there is no catalyst.
Valuation PER 17.4X Yield 6.3%
Conclusion The shares are up 28% since the October strategy was outlined. The PER is 17.4 is now becoming up with events like most stocks in the market.
IntegraFin (LON:) – Q1 Update
Share Price 455p
Mkt Cap £1,507m
Conflict Disclosure: No Holding
Update. Net inflows of 2.5% over the quarter to December bring FUD up 4% to £39.3bn. The company suggests that Transact had the highest net inflows of all advised platforms. FUD are now 24% higher that 12 months ago.Estimates Forecasts to September 2020 assume 12% revenue growth which assumes steep pricing attrition given AUM are 24% up on 12 months ago. Room for upgrades perhaps as we get closer to the autumn.Valuation PER 33.2X Yield 1.9%.Conclusion 50% operating margins makes growth have a powerful effect on profitability. By 2022 the PER drops to 25X and with upgrades the shares may be discounting perhaps 3 years ahead. Which is OK for the very long term investor. But not the value investor with a tin het firmly secured under the desk. This remains a market sensitive stock.
