Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON
  1. Homepage
  2. Equities
  3. Germany
  4. Deutsche Boerse AG
  5. FlatexDEGIRO AG
  6. News
  7. Summary
    FTK   DE000FTG1111

FLATEXDEGIRO AG

(FTK)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

Flatex AG : Leading pan-European broker

04/16/2020 | 07:33am EDT

Formerly known as FinTech Group AG and focused on the DACH region, Flatex is turning into a pan-European discount broker essentially catering to a retail clientele.

In a like manner with the recent investments initiated in our portfolios, the group should benefit from the peculiar current economic environment, for market intermediaries record peak earnings during volatile periods.

zb_graphique_de_cours

Flatex got its start in 1997 as a BPO service provider for Bankenverband and E-Trade, developing full-scale IT infrastructure to support their brokerage operations. In 2005, it ventured on its own and received the "Best German online broker" distinction; a few years later, it secured a banking licence.

Headlines today are all about the takeover of DeGiro, the Dutch broker built upon the outstanding Interactive Brokers' infrastructure. On an enterprise value basis, the deal, funded by cash and the issuance of 7.5mil new shares at €25 per unit, values DeGiro at x4 revenue, x20 EBITDA and x25 net earnings.

The combined enterprise will weight €200mil in revenue, €50mil in EBITDA and €30mil in net income. The latter, by the way, may slightly overstate true earning power, as capital expenditures surpass actual amortization expenses  — unlike Interactive Brokers, Flatex capitalizes a large part of its technology investments.

Still, the German group will count among the top European contenders — along with SaxoBank, E-Toro or IB — as they rush toward scale. The bet is on individual transaction processing cost to decrease as the volume of orders increase, transforming otherwise low-margin commodity businesses into a moat-like service providers.

Expected completion of the merger is expected for Q2 2020. 27mil shares will be outstanding, vs. 20mil today. Current market price of €28 per share thus values the combined entreprise at €756mil. Since there will be no debt or cash in excess, the combined enterprise carries a similar price tag with standalone DeGiro, despite a much larger scale and scope of operations.

In effect, the combination will create the largest pan-European retail broker, serving 780,000 customers and sporting a 25% market share in Germany, 40% in Austria and 35% in The Netherlands. Trading flow will hit €200bn annually vs. €150bn today, and synergies at the infrastructure level should exceed €30mil.

Mid term management's ambitions are to drive revenue to €300mil and earnings up to €3 per share. Albeit no timeline was disclosed, a share price expansion will inevitably occur if this scenario comes to fruition. Superior execution at Flatex since the early days and superb mindshare across Europe at DeGiro give valid reasons to hope. Both brands carry pristine franchise value.

The huge amounts of money invested over the years in technology allow for a substantial competitive advantage. Few rivals can come close to charging Flatex's prices and earn a profit, for they lack the scale and automated infrastructure. Unless its service deteriorates to a dramatic extent, overtaking the incumbent low-cost provider will remain a suicide mission.

Another feature of the merger is the strong joint client growth rate of over 200,000 clients (at least in FY2019). The two groups maintain impressive organic client growth rate, above 30%. Low fees, a comprehensive product range — stocks, bonds, ETFs, funds, derivatives, FX, etc. — and access to 50 exchanges should lay the ground for continuous success.

Analysts — whose consensus is probed in real-time by MarketScreener — think no less, as they've just lifted their estimates and price targets for the years to come. This is exactly the momentum we were expecting to add the stock to our European portfolio.

Absent failed execution, which may always happen, the main risk lies in the poor visibility of liabilities and actual financing standing — as with all brokers. However, Flatex looks well-capitalized in every respect, while its banking licence — which means the group must comply to stringent capital ratios — provides relative safety.


© MarketScreener.com 2020
Stocks mentioned in the article
ChangeLast1st jan.
AT HOME GROUP INC. 0.11% 36.8 Delayed Quote.138.03%
BEST INC. -5.19% 1.28 Delayed Quote.-37.25%
FLATEXDEGIRO AG -1.27% 109 Delayed Quote.73.86%
FLATEXDEGIRO AG -1.00% 108.4 Delayed Quote.72.71%
HOPE, INC. -2.69% 1051 End-of-day quote.-76.62%
THE TORO COMPANY -0.05% 104.39 Delayed Quote.10.07%
All news about FLATEXDEGIRO AG
06/16FLATEXDEGIRO  : Warburg Research reaffirms its Buy rating
MD
06/14FLATEXDEGIRO  : Gets a Buy rating from Hauck & Aufhauser
MD
06/11FLATEXDEGIRO AG : Release according to Article 40, Section 1 of the WpHG [the Ge..
EQ
06/08DGAP-PVR  : flatexDEGIRO AG: Release according to Article 40, Section 1 of the W..
DJ
05/31FLATEXDEGIRO AG : Release according to Article 41 of the WpHG [the German Securi..
EQ
05/27DGAP-PVR : flatexDEGIRO AG: Release according to Article 40, Section 1 of the Wp..
DJ
05/27FLATEXDEGIRO AG : Release according to Article 40, Section 1 of the WpHG [the Ge..
EQ
05/27FLATEXDEGIRO  : Hauck & Aufhauser reiterates its Buy rating
MD
05/27TODAY'S ANALYST RECOMMENDATIONS : Amazon, Best Buy, Cisco, Foot Locker, Nordstro..
05/27FLATEXDEGIRO  : Berenberg gives a Buy rating
MD
More news
Surperformance Ratings©
  Help  
Fundamental ratings
Overall rating
Trading Rating
Investor Rating
Growth (Revenue)
Valuation
Finances
Profitability
Earnings quality
Business Predictability
P/E ratio
Potential
Yield -
Consensus
7 days EPS revision
4 months EPS revision
1 year EPS revision
4 months Revenue revision
1 year Revenue revision
Key data
Capitalization (EUR)
3 010 954 324
Capitalization (USD)
3 569 596 116
Net sales (EUR)
261 490 000
Net sales (USD)
311 042 355
Number of employees
971
Sales / Employee (EUR)
269 300
Sales / Employee (USD)
320 332
Free-Float
52,8%
Free-Float capitalization (EUR)
1 589 732 357
Free-Float capitalization (USD)
1 884 685 664
Avg. Exchange 20 sessions (EUR)
71 625
Avg. Exchange 20 sessions (USD)
85 198
Average Daily Capital Traded
0,00%
Income Statement Evolution
EPS & Dividend
EPS Revisions
Revenue Revisions
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 7
Average target price 148,14 €
Last Close Price 110,40 €
Spread / Highest target 54,0%
Spread / Average Target 34,2%
Spread / Lowest Target 8,70%
Consensus revision (last 18 months)