Report

The party is going on...

The party is going on...

EARNINGS/SALES RELEASES

Swissquote released this morning new targets for the FY2020 results (expected to be disclosed on 18 March 2021):
- the company is expecting at least CHF315m (vs CHF300m previously and CHF312m for our expectations)
- profit before tax above CHF105m (vs CHF100m previously and CHF105m for our expectations).
- Clients assets rose to an all-time high of CHF39.8bn
As importantly, these numbers should be sustainable going into 2021 (“Swissquote thus achieves the best results in its history and aims to continue growing its revenues and profit in 2021”).

ANALYSIS

These better numbers were partly expected as Swissquote’s share price’s stellar performance continued on a one-year basis. The share is also still up 2% today.
While we were cautiously optimistic, as the sharp increase in the opening of new accounts had to be maintained, management looks confident this should be the case going into 2021 and later.
It expects to continue increasing its revenues and profits in 2021. We also expect a new guidance for 2022 as the previous one was reached two years ahead of schedule. In 2019, management indeed expected, for 2022, a CHF100m pre-tax profit with CHF36bn of clients’ assets. Simply extrapolating this ratio with a stable level of clients’ assets in 2022, Swissquote’s pre-tax profit would stand at CHF111m in 2022.
And that does not take into account Swissquote’s recent or future growth initiatives. Internaax should indeed prove to grow going into 2021 and later.
We need more details regarding the partnership between Swissquote and Postfinance (a 50% JV between the two companies) to launch an app with the ambition to compete with Revolut or N26. But leveraging Postfinance’s three million customers could only prove to be profitable.
The recent volality of cryptocurrencies in recent weeks will add to Swissquote’s Q12021 revenues (as was the case in H1 18). The institutionalisation of the trading of cryptocurrencies should also add to Swissquote’s revenues in a sustainable way.


IMPACT

We will raise our estimates going into 2021 and 2022.
Underlying
Swissquote Group Holding AG

Swissquote Group Holding is engaged in the provision of Online Financial Services. Co. provides online securities trading services (including custody services) and quantitative asset management services (ePrivate Banking among others) to self-directed private investors, independent asset managers, investment funds, and third party financial institutions. Co. provides access to over-the-counter FX markets through in-house technology platform to retail customers, money managers, and third-party financial institutions. In addition, Co. operates an online bank that accepts deposits in the form of current accounts and saving accounts from its customers.

Provider
AlphaValue Corporate Services
AlphaValue Corporate Services

AlphaValue Corporate Services capitalise on the research and credit analysis expertise deployed by AlphaValue with major institutional investors at European level over the past nine years. The proprietary tools and processes enabling AlphaValue Corporate Services to establish a valuation and/or a credit risk assessment are identical to those used by AlphaValue to the benefit of its institutional clients. The only difference is the recognition that a company evaluation cannot be dissociated from the fact that the latter is paying for the service (AlphaValue Corporate Services), as opposed to the investor footing the bill (AlphaValue). AlphaValue’s research tools are characterised by the transparency of the valuation methodologies, their responsiveness to market data and by nine years’ experience of a universe numbering more than 450 European companies. Through its coverage and sector exhaustiveness, AlphaValue ranks alongside the major research houses in Europe and constitutes the only new entrant to the European space in the past decade. This significant presence is reflected in an unrivalled distribution capability via platforms commonly adopted by investors to access research: Factset, Bloomberg, Capital IQ and the numerous websites. AlphaValue is one the largest research contributors to these platforms, to the benefit of AlphaValue Corporate Services issuer clients.  The AlphaValue Corporate Services analysts are AlphaValue’s sector specialists. Their robust knowledge of the business models in their sectors enables the rapid generation of incisive, relevant research and advantageous interaction with the management teams.

Analysts
Farhad Moshiri

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