What is our take-away from the FY-2021 analyst conference? 1) Management sees strong growth potential with targeted CHF85bn of client assets generating CHF750m of revenues and CHF350m of EBT in 2025, a 12% CAGR; 2) Client growth, rising U.S. rates and broader crypto offering are main growth driver; 3) 2022 guidance includes only two U.S. rate hikes which looks conservative. We increase our EPS estimates by 1/5% for 2022/23 and raise our valuation range to CHF190-230.
Client growth option: deep in the money - 26% CET1 to allow for further MandA
Swissquote raised CHF4.7bn NNM driven clients domiciled in Switzerland and APAC/Americas and added 27k new accounts in H2 21, up 18% y/y: growth is well on track. Management considered the quality of 2021 new clients wins as high - a view we share. These clients accounted for 16% of 2021 net revenues and contributed 48% to net revenue growth. Management highlighted CHF1.4bn of NNM in January/February 2022 indicating a similar run-rate as in H2 2021 - positive in a challenging macro environment.
Crypto option: in the money - Swissquote''s crypto exchange to provide additional upside
Crypto trading revenues cooled down to CHF38.8m in H2 21 vs. H1, but we see further growth potential. Mgmt. has already on-boarded 25 asset managers and 10 institutions to its crypto exchange. We like this additional spread-related revenue pool which we estimate at ~CHF10m short-term by internalizing 10% of the crypto flow. Management highlighted an additional CHF20m revenue pool from staking services making the crypto revenue line less dependent on volatility.
Interest rate option: close to the money
Swissquote'' deposit business has been challenged by negative rates at central banks and limited investment opportunities but there is light at the end of the tunnel. Management highlighted a liquid portfolio of CHF6.2bn ready to be invested. We expect the company to strongly benefit from rising U.S. rates as 28% of its...
