Ig Share Discussion Threads

[yf23_1] 10/3/2009 11:02

If you read the RNS it is quite clear that they are saying there won't be any growth in profits. They might have more accts but they won't be generating as much profit.
So short term no growth, so PE 12 down to PE 8.
Longer term may be OK, but short term they are getting rerated.

[sebass] 10/3/2009 10:49

IG index does not allow you to trade their own stock

[overeager] 10/3/2009 10:33

Expect we'll see L&G sweep up some cheap stock later.

[gerdmuller] 10/3/2009 10:32

Is there some rule about trading these on IG Index? Cant seem to find them.

[raweden] 10/3/2009 10:17

I agree 51, I think this is a big over reaction and is a good opportunity. I think its a reflection of the market we are in at the moment, with any negative news being the focus, rather than the positives. I thought the announcement overall was good news. Controls over bad debt are working, accounts opened increasing and good profits. Sure we have seen a downturn in some business areas but personally I expected this (the market didnt obviuosly), but it was against strong comparatives. I think its a good long term prospect now and I bought this morning as a consequence.

[equity trader 51] 10/3/2009 10:07

Why 30% down, not just 10% ? Seems overdone and oversold ?

[rik shaw] 23/1/2009 19:00

Quiet thread considering the interims and resulting rise this week.

rik

[gconvery] 30/12/2008 10:31

Definitely on an upward move now as we head towards interim results - maybe those bad debts won't be so significant in the overall view.

[spob] 21/11/2008 10:33

from FT Alphaville 20 Nov 08


NH: Results out from financial spread betting company IGPM: ah!PM: that will be worth looking atPM: rumours have been swirling for weeks about bad debts in the spread betting worldPM: some of it's to with that Scottish wealth management company that went underNH: Echeleon Wealth Management you meanPM: yepNH: hmm, I think that is a very interesting storyNH: might even be worth a visit to Glasgow to investigateNH: I hear the police are involvedNH: anywayNH: back to IGNH: released trading update ahead of half year figures this morningNH: and in line with just about everyone else in the industryNH: : they are enjoying strong top line growthNH: lots of people opening new accountsNH: in the second quarter of its current fiscal year, IG reckons it will open 22,000 vs new accounts against 10,000 in the same period last yearPM: goodness meNH: although 4,000 will come from that Japanese internet fo-rex broker they acquiredNH: personally I am not sure how much longer this can keep upPM: not at that pace - unless they break into china of courseNH: I get the fact that volatility is good for financial bettingNH: but with things getting tighter out thereNH: do people really have spare cash to punt on massively volatile markets?PM: I think people are actually tempted by the volatilityPM: But they are likely to lose their shirts very quickly indeedNH: so, all the top line stuff is goodNH: but there has been a marked increase in bad debtsPM: NH: they increased to £15m, with 80% of this occurring in OctoberPM: So a lot of margin calls were not metNH: would seem soNH: and IG are saying that clients lost money in RBSNH: and trading indicesPM: rightNH: net, netNH: : the £15m bad debt charge is equivalent to 12% of revenuesNH: and the higher charge means that PBT is likely to come in.£3m below City forecastsPM: rightPM: analyst comment?NH: OKNH: here you goNH: this is from NumisNH: In summary the top line was very strong as new account
openings, client activity and volatility were at record level but we believe the market
is likely to have concerns over the increase in bad debts. We leave our forecasts
unchanged at this point for the full year but suspect the composition will change
with higher revenues offset by the increase in bad debts and betting duties in the
first half, although directionally we would expect greater downside risk to our
numbers. Target price and recommendation are under review.
NH: Bad debts rise will be the major concern: In our view, the market will focus on the
significant increase in bad debts, which increased to £15m with 80% of this occuring in October. We understand that the Group's provisioning approach is to provide 25% for debts over 30 days and 100% for debts over 100days. Clearly our numbers will have to factor in the increase we have seen in H1.NH: Top line continues to prove resilient: The Company experienced record levels of
account openings and client activity which resulted in revenues of £125m (+45% yoy)
c9% ahead of our numbers and PBT £58m (+21% yoy) although in line with consensus this is around 8% below our numbers. The variance due to higher bad debts.

New account openings strong: The company indicated that new financial account
openings in Q2 stood at 22,000 vs 10,000 in the prior year, with this being a lead
indicator for revenues this should help support revenue growth in the second half.NH: International business performaning very well: The expansion outside the UK is
going very well, with revenue growth of +85% qoq and represented c15% of total
revenues. The acq of JapanOnline is progressing ahaed of expectations with 4000 new
customers in first 2 months and synergies already being achieved.

Composition of forecasts will change: We believe our bottiom line forecasts will be
trimmed modestly at this stage but the composition will change more dramatically as
higher revenue growth is offset by higher bad debts and betting duties. We will confirm post the analyst call at 8.30am today. Consequently we put our target price under review.NH: and here's InvestecNH: H1 trading update; benefits and costs of volatility
Strong client growth and volatile markets resulted in strong revenue growth of
45% in H1 to £125m vs. our expectation of £115.4m. However, volatility has
also resulted in significant bad debt incidence in October, resulting in bad
debts as a % of revenues increasing to 12% in H1 versus c.3% in H2'08. As a
consequence of higher bad debts, PBT is likely to come in £3m lower than our
forecast at £58m. Higher client growth means we retain our FY forecasts.
NH: Strong revenues but high bad debts – Volatile markets resulted in heightened
levels of client recruitment and trade activity levels, and are expected to push
revenues ahead by 45% to £125m versus our forecast of £115.4m. Excluding
the impact of the Japanese acquisition, revenue growth should be an impressive
c.35%. However, bad debts are expected to be £15m in the period, equivalent to
12% of revenues, around three times higher than our expectation. Higher bad
debts mean that PBT is likely to come in c.£3m below our expectation at £58m.
NH: October hits bad debt provision – The high levels of volatility seen in October
adversely impacted bad debts, with the company expecting to make a provision
of £15m for the period, equivalent to 12% of revenues. We had expected bad
debts as a proportion of revenues to remain at similar levels to H2'08 (c.3%).
Management indicates that the bad debts relate to a relatively small proportion
of its client base by both number and revenues, with the largest debts relating to
positions in RBS and the main indices.NH: Higher betting duty indicates a difficult period for its clients – It was not
only bad debts that are likely to come in ahead of our expectation, as betting
duties are expected to be c.£7m versus our forecast of £5.2m. Higher betting
duties indicate higher levels of client loss, potentially impacting clients'
propensity to continue using IG's service.
NH: Strong client growth bodes well for the future – The company attracted 22k
clients in Q2, more than double the number attracted in Q2'08. IG's new

European operations have had a particularly strong period, with management
changes in Germany seemingly having an immediate impact on this business's
ability to recruit new clients.NH: No changes to our full year forecasts – Despite H1 profits coming in lower
than we forecast, we do not expect to amend our full year forecasts. Higher
levels of client growth will support the business in H2 to a greater extent than we
have in our current forecasts, thus offsetting the bad debt impact in the first half.

Summary and recommendation – Bad debts are worrying, but should be
exceptional in nature and are offset to some extent by the volatility benefits to
revenues. While the significant increase in bad debts should prove a one-off, the
benefits of higher client growth should prove lasting and support the longer-term
growth prospects of the business. We retain our Buy recommendation, but will
revise our price target to better reflect the risks of bad debts.PM: thanks for all thatPM: And thanks to Baz below for pasting LIBORNH: and I almost forgotNH: the IG share priceNH: down 54.5p at 174pNH: that's almost a quarter of its market cap removed this morningNH: and means anyone who bought into IG's recent fund raising is sitting on a huge lossPM: Placing - wot placing??NH: raised £85m to pay for the Japanese carry trade broker they acquiredNH: shareholders stuffed atNH: wait for itNH: 295p a sharePM: OUCH


PM: neil and I had lunch yesterday with the head of one of the smaller spread betters

NH: amazing lunchNH: I left stunnedPM: We were talking about FX trading and asked how much leverage they offeredPM: He ssaid:NH: 300 timesPM: Before adding:NH: and your point isPM: We, said - "Er.."PM: "Do you not fear regulation"NH: NoNH: he also came up with an amazing stat

NH: that clients never make money in financial spread bettingPM: Yes, repeated told us that the clients were always wrongPM: And he said it with a smile on his face

NH: and to protect themselves from bad debts they have an aggressive stop loss system that just takes you out if there is a spike

PM: For those who dont know , let me just run thru quickly how spread betting FX will lose you lots of money

PM: You put up a few grands - and then feel smart punting 1mPM: You think sterling will go to - say - 125, and bet that wayPM: It might go to 125, but not in a straight line - and if you are levered 300 times with automatic stop loss, you will be wiped out with the first bit of volatility


NH: i was just stunned by the contempt in which they held their customers


NH: sheep just waiting to be fleeced

[nilip] 21/11/2008 08:14

Morning all.

I've gone long this morning @ 171p

Envisage a strong bounce here post results.

Fall looks over done.

[petethehippy] 20/11/2008 11:57

£15m is no lie.. it was highlighted.. in their interim management statement today. They didnt have as much control in their bet acceptance and settlement and so have tried to remedy this.

Their guidance is £58m pre tax profit for H1.. so if we sub in zero growth for H2.. then expect £116m.. full year pre tax profit.

Current Market cap is.. £635m.. so thats makes a PE of 6...

DPS is 12p. Making current yield 7%.

mmm... does that sound like a sell?

[cottlet] 20/11/2008 09:20

HAve heard that IG have £15million of doubtful debt from clients.

[cottlet] 11/11/2008 08:27

anybody else checked their dealing charges?

[whiterussians] 16/10/2008 11:51

Anyone think so?

[the white house] 09/10/2008 14:08

judging by my broker being blown out of th water with business at the mo can anyone confirm that these guys must be doing good/very good or even record levels of business???

cheers in advance
TWH