The Case for Argentex - AGFX
Argentex (LON:AGFX) provides foreign exchange (FX) services by acting as a Riskless Principal broker for non-speculative spot, forward foreign exchange and structured financial derivative contracts. It supplies tailored foreign exchange advisory and execution services to institutions, corporates and high net worth private individuals.
In the their Interim results on 8 November 2021, Harry Adams, CEO of Argentex comments:
"We're delighted to be reporting a record set of H1 results with strong revenue and profit growth driven by a continued surge in client trading activity and increasing demand for our services. As confidence returns in the aftermath of the pandemic, we're delivering across all of our key performance metrics, enabled by our robust model and tireless approach to risk management. Our investment in high-quality people and evolving technology is integral to our market-leading service as evidenced by our growing client base in all trading environments. We remain confident in our future and long-term strategy to deliver on our ambitious growth plans, and we are well placed to capitalise on the significant opportunities that lie ahead."
Latest Argentex (LON:AGFX) H1 Results Presentation, 8 November 2021
Tamzin Freeman’s pitch for Argentix in the September 2021 Stockopedia/PIWORLD Virtual StockSlam is @ 09:11
Piworld interview of Ken Wotton, Managing Director, Public Equity discusses Argentex @ 40:18
In the Stockopedia 'Small Cap Value Report of 1 July 2021, writing about Argentix, Jack Brumby writing concludes
“All in all though, these results strike me as better than they might have been given the exceptional conditions, and the company seems to have its sights set on long term growth. Given that sentiment is lukewarm at the moment and the shares remain close to the IPO price from a couple of years ago despite strong growth forecasts, it could be a good time to do some digging.”
On 8 November 2021, Investors Chronicle says Argentex is trading at a clear discount to peers, it benefits from volatility, and currency flows boost the bottom line. The article says
“The company’s business model is reliant on achieving scale in its operations before the needle can move significantly on its profits, so the investment in sales and marketing makes sense. House broker Numis forecasts EPS for 2022 of 7.9, rising to 10.8 the following year, which gives an undemanding forward PE rating of 11 and 8, respectively. The clear discount to its peers looks a good opportunity to lock-in a potential re-rating. Buy.”
Argentix is not doing too badly, although their rating is very modest compared to Alpha Fx (LON:AFX) . Perhaps what is holding Argentix back at the moment is their current investment cost and overhang; once this is done then the company should re-rate. Their new tech platform (due to be ready next year) should fuel further growth.
For those willing to be patient, the company offers substantial growth potential and future re-rating as long as there are no surprises. (I hold)
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5 comments
I can't see many figures for Argentex (LON:AGFX) I ones I can see look modest compared to Alpha Fx (LON:AFX) which I hold.
There is also the issue of the CEO resigning and selling his shares.
Also I have read that some senior staff have also resigned?
I did have a look at Argentex (LON:AGFX) a while ago but was not convinced about them.
I agree Alpha Fx (LON:AFX) look expensive and I have reduced my holding but the growth is there.
Rustbucket, you raise some valid observations - hopefully some of these issues like the CEO leaving and selling his holding will soon become historical as the company progressses with its plans. Tamzin' Freeman in the recent Stocopedia Stockslam @ 12:20 (see link above) explains the Co-founder Carl Jani left the company because of illness and his share holding was taken up by other Argentix management and large intitutions such as Amati and Gresham which was positive endorsement. Numis have a price target of 150p.
Carl Jani actually returned to the company after a period of ill health and subsequently left rather abruptly. In two company RNS messages the Chairman thanked CJ for his efforts but his former co-CEO (and now sole CEO, Harry Adams) was conspicuously silent on both occasions. Reading between the lines there seems to have been some kind of serious falling out between the two co-CEO's.
CJ subsequently disposed of his holding (approx 12%) which was managed over a few weeks by the company so as not to overly disrupt the market. The holding was sold at 80p, a considerable 25% or so discounted price.
CJ subsequently posted photos on social media showing him drinking and relaxing on a boat in the Med. The appearance this transmitted was rather one of sticking two fingers up to the new CEO and re-inforcing the suggestion that there had been some bad blood between them.
This, of course, is all impression and interpretation but maybe the real truth will come out one day.
This is an Interesting write-up on Argentex (LON:AGFX) (from some months ago). It concludes
"So will the AGFX share price and market cap follow the lead of AFX?. Certainly one should expect significant upside to AGFX market cap and share price over the next 2-3 years. EPS growth alone should deliver solid upside, valuation rerating could potentially add more to the share price. Is AFX overvalued, AGFX undervalued? Probably a bit of both. On a relative valuation basis AGFX certainly looks a lot more appealing and some PE rerating higher looks realistic in a rallying stock market."