Shares in Alpha FX (AFX) rally 5% or 30p to 595p after the company reveals that earnings for the full year will top market expectations.
In its year-end trading update the firm says that both its corporate business and its newly-established institutional business have traded ‘strongly’ during 2018.
Alpha’s main business is providing foreign exchange services for UK and overseas firms which buy and sell goods and services in different currencies.
UK clients include retailers such as ASOS (ASC:AIM) and Halfords (HFD) for example, which buy goods in euros or other currencies and sell them to UK customers in pounds.
Other Alpha customers include energy companies whose products are bought and sold on world markets primarily in US dollars.
It also provides hedging programmes to help companies calculate how much foreign currency they need to buy and how far ahead they need to buy it to manage their cash-flows and liabilities.
ATTRACTIVE PROPOSITION BUT SHARES HAVE RE-RATED
A big selling point for Alpha is its online platform which allows clients to manage their currency exposure on an almost bespoke basis.
The platform comes as standard with no up-front cost or annual maintenance fee and more clients are moving their treasury and currency management functions onto Alpha's system to save money.
Alpha has rolled this no-fee platform offering out to institutional investors who represent an even bigger potential market given the amount of currency dealing involved in managing global investment pools.
Since floating at 196p just over a year and a half ago Alpha FX shares have gained 200% including today’s move which puts them among the very best performers in the UK stock market.
Over the same period analysts have raised their earnings forecasts for 2018 by around 40% which is well below the price increase.
Therefore the shares have re-rated from 12 times expected 2018 earnings at the time of the IPO to 26 times earnings today.
