AlphaValue Corporate Services
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Swissquote Group Holding

CR
Bloomberg   SQN SW
Internet banking/Fintech  /  Switzerland  Web Site   |   Investors Relation
Suited for all market seasons
Target
Upside 6.89%
Price (CHF) 276.8
Market Cap (CHFM) 4,243
Perf. 1W: 1.54%
Perf. 1M: 12.8%
Perf. 3M: 19.2%
Perf Ytd: 37.5%
10 day relative perf. to stoxx600: 5.43%
20 day relative perf. to stoxx600: 10.0%
Earnings/sales releases17/03/2023

Unrelenting customer growth - again

After releasing preliminary FY 22 results a few weeks ago, Swissquote released its detailed figures this morning. The firm confirmed its robustness in the face of very tough market conditions. Customer growth continues to be sustained despite the inflationary environment, confirming the effectiveness of an anti-mass market product. Interest income gives the firm a natural hedge against financial market volatility.
We confirm our investment thesis and our positive opinion.


Fact

FY 22 release

  • Sales ended at CHF 408m (-13.5% yoy) vs. CHF 400m (AV estimates) and CHF 407.8m (BBG Cons.)
  • Number of accounts rose 10.5% to c.539k vs. 543k (AV estimates)
  • Client assets reached CHF 52.2bn (from CHF 55.9bn in 2021) vs. CHF 55bn (AV estimates)
  • Pre-tax profit stands at CHF 187m vs. CHF 186m (AV estimates) and CHF 187m (BBG Cons.)
  • Pre-tax profit margin robust of 45.7% vs. 47.3% in 2021
  • Net profit of CHF 157m vs. CHF 159m (AV estimates) and CHF 159m (Cons.)
  • DPS of CHF 2.2 vs. CHF 2.2 (AV Estimates) and CHF 2.6 (BBG Cons.)

Analysis

Swissquote confirmed the positive feeling generated by the preliminary FY 22 results. Sales remain robust, in-line with the guidance, while the latter has been confirmed for 2025 – which is a positive given that it had initially been set in a wholly different context.

Interest rates compensated for the decline in transactions which is a great asset for the firm. In our view higher rates, which have resulted in half-mast transaction volumes for the retail brokerage platforms, will continue to generate high interest income for the firm as they continue to rise but also more customers join the platform.

As stressed by the management, the good news is that platform customers are not using Swissquote as a regular bank from which they would expect to receive interest income. Instead they use it as a portfolio management tool. The share of cash deposits as a percentage of customer assets has increased from 15% to 18% yoy, and this is not only due to lower Assets Under Custody. Although this represents a modest increase in CHF-amount (from an average cash deposit per customer CHF 17.2k to CHF 17.4k), the continued growth in customers will continue to feed this pool of cash as well as transaction volumes.

In fact, the firm has recorded 10.5% growth in accounts yoy and, as we have said in the past, we believe that the past 12 months growth in customer accounts offers substantial potential for further volumes given that:

1. New customers should progressively add funds as they become familiar with the tool
2. Customers that have joined within this window have faced tumultuous markets, massively impeding trading massively


Impact

We are confident that Swissquote will meet its objectives. On top of a sustained growth, the firm has an extremely discipled cost management policy.
The DPS of CHF 2.2 (in line with our expectations), similar to the 2021 level, is a material sign of resilience given the variation of the firm’s profitability year on year.
We also like the fact that the firm has some cash at hand to finance new projects.

Our investment thesis is confirmed and our model update will not lead to a change in recommendation.


Updates

14 Mar 24 Earnings/sales releases
FY-23: all-weather business model continues to...

11 Aug 23 Earnings/sales releases
H1-23: NII tailwinds persist; 2023 guidance upg...

16 Jun 23 Target Change
More rates, more money

17 Mar 23 Earnings/sales releases
Unrelenting customer growth - again

07 Mar 23 Other news/comments
Swissquote’s hidden value

07 Mar 23 Target Change
Swissquote is a must-have

16 Jan 23 Earnings/sales releases
Swissquote meets 2022 expectations; onwards ...

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