Flatex - Grateful for volatility
Flatex reported H120 earnings of €22.4m (+162% y-o-y) and ROE of 23.1%. Volatile markets helped trade executions jump 127% y-o-y to €13.1m. Client numbers continue to grow strongly, up 35% y-o-y. On 21 July 2020, the Dutch central bank gave Flatex the green light to acquire DEGIRO, a leading Dutch broker. The acquisition (agreed in December 2019) is transformational, adding greater scale and breadth of products to make Flatex Europe’s largest retail online broker, present in 18 countries. If we include DEGIRO, the combined number of transactions in H120 would have been 37.6m and the number of customers almost triples to 1.1 million. The shares have reacted well to the news, but still trade at a discount to peers on both P/E and EV/EBIT despite consensus forecasts of above average growth.Flatex AG, formerly known as Fintech Group AG, is a Germany-based company engaged in the financial technology sector. The Company divides its business into two operational segments: Securities Trading and Financial Services (ST & FS) and Transaction Processing and White-Label Banking Services (TP & WLBS). The ST & FS segment includes online brokerage in the business-to-consumer (B2C) sector in Germany (on trading platforms such as flatex.de, vitrade.de) and Austria (flatex.at). The operations are conducted by the subsidiaries flatex GmbH and ViTrade GmbH. The TP & WLBS segment includes the business-to-business (B2B) activities of subsidiaries XCOM AG and FinTech Group Bank AG that focus on research and development in the area of financial technology and provide back-end execution of securities transactions for the Company's own platforms and for other banks, as well as offer business process outsourcing services.
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