lekkerbek schreef op 1 april 2020 14:38:
Summary
We published a new note on Flow Traders (FLOW) today. Ten days ago, we
concluded that FLOW would have its best quarter ever, due to the
pandemic-driven volatility spike, driving both velocity and bid-ask spreads in
global ETFs (significantly) higher. Three days later, we upped our 1Q20 estimates
already (from EUR 250m to EUR 350m NTI), due to the extraordinarily favourable
market circumstances. Today we increase our estimates once again; we now
expect 1Q20 NTI of EUR 500m (2x FY19), EUR 324m EBITDA (4x FY19), and
EUR 5.67 EPS (22% of market cap), obliterating consensus expectations.
Moreover, looking at the anatomy of a volatility spike, one could expect
heightened volatility through to early 4Q20, which would imply even further
upside. We raise our target price to EUR 40/sh (from EUR 39), which implies 52.
6% upside from yesterday's close. We keep FLOW as a Most Favourite Buy.EUR
500m NTI in 1Q20, more than double that in FY19 âۥ Trading conditions in
the global ETF market have been extraordinarily favourable for FLOW recently.
Since the Corona crisis kicked off (weekend of 22 February), the daily global
revenue pool in ETFs has been more than six times as large as the 2012-2019
average, and almost double that on 'Brexit-day'. Where FLOW makes EUR 1.5m
NTI on a 'normal' day (VIX c.20), we estimate it has made an average EUR 19m
per day over this period. We estimate FLOW's NTI to be EUR 500m in 1Q20
âۥ more than double what it had made in the whole of 2019 âۥ obliterating
consensus expectations (EUR 177m). Volatility likely to be higher for longer
âۥ Looking at previous volatility spikes, we find an average 193 calendar days
for VIX to return to normality from the summit. If 2020 turns out to be 'average'
there will, therefore, be heightened volatility through early 4Q20. This in not in our
estimates, which we base on normal trading conditions.22% of market cap
generated in one quarter âۥ On our estimates, FLOW will make EUR 5.67
EPS in 1Q20, or 22% of its market cap. FLOW typically pays out c.50% of its 1H
EPS in interim dividend, which would imply EUR 3.1/sh to be paid in August (12%
interim divi yield). For FY20 we would expect c.EUR 5.5 DPS, or 21% capital
return yield. Reflecting the strong 1Q20 result, we raise our target price to EUR
40/sh (from EUR 39). FLOW remains on our Most Favourite Buy list (on it since
28 February 2020).More details in today's note.