OFX Group Limited
| ASX code: OFX | www.ofx.com | |
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| Share price ($) | 1.41 | |
| 12-month high ($) | 2.47 | |
| 12-month low ($) | 1.25 | |
| Market capitalisation ($mn) | 342.0 | |
| Price-to-NTA-per-share ratio | 5.7 | |
| 5-year share price return (% p.a.) | −1.2 | |
| Dividend reinvestment plan | No | |
| Sector: Financials | Company | Sector |
| Price/earnings ratio (times) | 16.3 | 15.0 |
| Dividend yield (%) | 4.2 | 5.9 |
Sydney-based foreign exchange specialist OFX Group, formerly known as OzForex, was launched in 1998 as a currency information website. It provides international payments services in 55 currencies to more than 190 countries, with offices in Sydney, London, Hong Kong, Singapore, Toronto, Auckland and San Francisco.
Latest business results (March 2019, full year)
OFX enjoyed a positive year, despite a subdued second half, with growth in revenues and profits. Australian and New Zealand business — which contributes about 50 per cent of company turnover and nearly two-thirds of profit — was especially strong. North America and Europe — together representing nearly 40 per cent of income — saw solid rises in revenues, and Europe enjoyed a 29 per cent rise in profits. However, North American earnings fell sharply. Asian profits also fell, despite higher income. The total number of the company's active clients fell by 3 per cent to 156 500, but the number of transactions per active client rose by nearly 13 per cent to 6.7, with the average transaction value also higher. In addition to the figures in this book, the company incurred $4.3 million in non-operating expenses from discussions concerning a possible acquisition of British foreign exchange specialist Currencies Direct, and at the statutory level profits fell.
Outlook
OFX occupies a small position in the huge global foreign currency market. This is a highly competitive business, and much of the company's success derives from developing strong relationships with its clients and from offering them more attractive rates than competitors like the big banks. It is also highly dependent on new technologies in order to help it maintain a cost advantage. The foreign exchange business appears to offer low barriers to entry, and with interest rates low it has been attracting many new entrants. However, levels of profitability are low for many of these companies, and OFX expects market consolidation to increase. It has expressed an interest in expanding more strongly into Europe through an offshore acquisition, and this lay behind its ultimately unsuccessful acquisition talks with Currencies Direct. It is also working to boost its activities in North America and Asia. However, there has been speculation that Facebook's plans to launch its own global foreign exchange network, called Libra, will severely hurt OFX. For the time being OFX management states that it believes the advent of Libra will actually encourage more consumers to shop around for currency exchange deals, to the ultimate benefit of companies like OFX.
| Year to 31 March | 2018 | 2019 |
| Revenues ($mn) | 109.9 | 118.7 |
| EBIT ($mn) | 23.3 | 24.9 |
| EBIT margin (%) | 21.2 | 21.0 |
| Profit before tax ($mn) | 24.9 | 26.4 |
| Profit after tax ($mn) | 18.7 | 21.0 |
| Earnings per share (c) | 7.79 | 8.67 |
| Cash flow per share (c) | 9.84 | 11.08 |
| Dividend (c) | 5.4 | 5.92 |
| Percentage franked | 100 | 100 |
| Net tangible assets per share ($) | 0.23 | 0.25 |
| Interest cover (times) | ~ | ~ |
| Return on equity (%) | 31.0 | 31.2 |
| Debt-to-equity ratio (%) | ~ | ~ |