The December 3, 2008 started the comments on the company, which on the other hand, is still one of the more regularly in the English market and since then I have made several updates the last one during the month of November 2009. Today has posted results that are slightly higher than the estimates that I performed in the first comment, namely 6% more, when many expected a setback that has not happened.
Let us squarely on the results presented and the situation of the company. Include:
* Net recurring (ie not atypical), just over 136 miles / Euros.
* EBITDA, also recurrent, of 194 Mill / Euros.
Based on these data and taking into account the capitalization at the close on Thursday 18 / 2, 1660 Mill / euro, trades at a PER of 9.8 after allowance net cash that the company has at the end of 2009.
The EV / EBITDA would be slightly below 7 times.
important data being based on them every indication that there are differences between value and price and that seems an option to consider, one wonders if in the future and on average are repeatable and therefore can actually be thinking BME.
In order to place the issue and allow others to draw conclusions, I will include additional data as well as some reflection that I consider of interest.
1) In recent months, the trading of shares (cash value) has been stabilized with a slight upward trend.
2) During the month and a half has passed, 2010, trading volumes have increased razonablemene over the same period in 2009. This does not mean that the trajectory is maintained, but suggests that in volumes of recruitment appears that the worst has passed and any further damage, if they should not be produced were significant.
3) The company maintains a positive operating leverage, I explain, with income not linked to volumes is able to cover 100% of their costs, though trading volumes in 2009 were lower than in 2008 . Besides operating costs are contained with slight decreases in 2009 compared to the previous year.
4) The 3 most liquid securities market of the European Union listed on the English stock market (SANTANCER, TELEFONICA, BBVA), besides indicating the importance of these companies in the market, our market (BME) is efficient and competitive as we should not forget that there are other large-cap companies in EUROPE.
5) The financial results for 2009 were considerably lower than in 2008, nobody can deny the interest rate environment in both years with very steep slopes in 2009. In the medium term interest rates will tend to higher levels allowing for a greater contribution to firm performance. I hope to see this circumstance in the latter part of 2010.
Based on the foregoing, it seems that the result of 2o10 should not be less than 2009 and that on the contrary, could be somewhat higher.
But before drawing a hasty conclusion we must consider other factors, which may involve possible reserves for the future input. Include: the
1) 4 th Quarter Results slightly lower than the previous quarter despite the increase in volumes, which may denote an unfavorable business mix. This business is more weight to lower fees (characteristic of blocks and large investors) to the detriment of small investors that after what happened in the markets seems to be missing and possibly more later to return to stay.
2) Increasing competition from other platforms, it is true that there is, the truth is that after more than a year, the share captured by these platforms do not exceed 1% at least regulated business. Another thing is to negotiate with other instruments such as eg. CFD, but the fact is that the volumes in the regulated market, seem to suffer.
3) regulatory changes to be introduced in the settlement system which now monopolizes. There is no specific legislation at this time, but it is true that in a couple of years there should be such legislation and to force settlement share with third what it will effect on revenue, but it is also true that there is time to make decisions and defend, in fact today in the submission managers have pointed out the possibility of taking advantage of the occasion to try to compensate as far as possible with the facet of the operations log.
In any case, we must know that the EBITDA of this business line is 25% of the company and that is unthinkable, at least for me, I can lose more than 50% of that business in very extreme cases and producrise, take several years so that the deterioration would be gradual and would manage option.
4) Slight fall in revenue from derivatives I understand on the basis that markets are experiencing a deleveraging process that seems to have ended.
Undoubtedly these factors pose threats in some measure must be taken into account, however the more regulation, at the same time, may provide an opportunity since to some extent could be a barrier to competition from other platforms against organized markets in which BME participation.
Considering the information I know now, I still think the same thought in the first comment and can be summarized as follows:
- still waiting for results in the setting of 135/140 Mill / Euros for the year 2010. I see no risk of there is a deterioration that could cause actual results for under 120 mill / Euros, results that translate into cash flow consistently.
- BME is a reasonable option. There is an adequate safety margin for return on investment to the market prices required by 02/18/1910.
- I continue to believe that the stock value is at least 27 Euros and that the market discounts over the possible effects that competition can have on the company's medium-term, competition in general affects all sectors. Furthermore managers have shown they know to guide the company to maintain adequate results despite having delivered in the form of dividend most of benefits.
For complete information, I recommend reading the comments on this company previously published.
Finally as always, remind that investment decisions should be taken with a risk control, with a sufficient safety margin (which as usual is different for each investor) and individually, all regardless of are contrasting opinions with others.
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