Euronext: limited positive reaction to the results, despite the low rating – 11/04/2022 at 15:39

(AOF) – Euronext gained 0.72% to € 63.94, third quarter results exceeded expectations thanks to less negative activity than expected and good cost management. Between July and September, the pan-European equity market saw its Adjusted EBITDA drop 5.2% to € 199.9 million, showing a margin of 57.1%, down 2.6 basis points in published data and comparable. Despite this decline, Adjusted Ebitda is 5% higher than expected.

This outperformance is mainly explained by better-than-expected revenues, explains UBS.

Euronext’s consolidated turnover reached 301.4 million euros, down 14%. It was weakened by an exceptional loss of 49 million euros linked to the partial sale of the compensation portfolio. On a like-for-like basis, sales decreased by 0.8%. The underlying revenues decreased by 0.1% (-0.8% on a like-for-like basis) to 350.3 million euros.

Costs reached € 150.4 million, up 5.6% on a like-for-like basis “in line with the cost target of € 612 million in 2022”. The cumulative synergies achieved thanks to the integration of the Italian Stock Exchange amounted to 24 million euros out of the expected 100 million euros.

The net debt / Ebitda ratio stood at 2.3 at the end of September against 2.4 at the end of June.

“Overall, this is a good set of results that we hope will be welcomed, especially given the recent poor performance of Euronext shares,” commented JPMorgan. The analyst expects an approximately 5% increase in consensus earnings per share. The stock has lost 20% since the presentation of the half-year results in July. In this regard, UBS points out that the valuation of the stock is low, trading at 11 times the expected earnings in 2023.


Key points

– First European financial center created in 2000, present in 23 states, which brings together the regulated markets of Amsterdam, Brussels, Dublin, Lisbon, Milan, Oslo and Paris, as well as various platforms;

– Revenues of € 1.3 billion, divided between transactions for 35%, listing for 14%, advanced data services for 14% and custody and settlement-delivery for 17%…;

– Growth model based on 5 pillars: strengthening the value chain, expanding the platform’s offer, expanding the offer to innovative quotations, products and services, strengthening positions in sustainable finance and pursuing external growth;

– Open capital with main shareholders who hold 23.81% of the shares – ABN Amro, Caisse des dépôts, Cassa Depositi e Prestiti, Euroclear, Federale participatie and Intesa San Paolo;

– Dutch company, Stéphane Boujnah is Chairman and Chief Executive Officer of the Board of Directors of 9 members;

– Maintaining financial solidity after the purchase of Borsa Italia, with a reduced leverage effect of 2.6, hence an increase in the outlook on debt in the spring.


– “Growth by impact 2024” strategy: annual growth of 3-4% of turnover and 5-6% of operating profit / maintenance of the dividend policy (rate of 50%) and investments (3-5% of turnover) / synergies with the Milan Stock Exchange of 100 euros for integration costs estimated at 160 million euros;

– 4 priorities for the innovation strategy: digitization, dissemination of information sharing and co-design, enhancement of the efficiency of core technologies and integration of innovations such as tokenization, tailored exchange models, etc .;

– Environmental strategy on 2 pillars, internally reducing the carbon footprint and, for customers, an expansion of the offer of services, accelerating the transition to sustainable finance: expansion of the offer of ESG indices in partnership with rating agencies or created at the request of some clients / Strengthening of the European leadership position in the offer of ESG investment vehicles – ETFs, investment funds, “green” bonds, derivatives, etc. and, in 2022, proposal of products and standards for commodity contracts / support to issuers in their ESG transition;

– maintaining competitive advantages – a single platform for transactions on European regulated markets and a range of services covering all the needs of financial market participants;

– High capacity for innovation, operating margin higher than that of European competitors and speed of execution of integrations.


– Weight and volatility of European regulation;

– After the record of 212 IPOs in 2021, strengthening of attractiveness through ESG indices, listing of innovative companies and offering of pre- and post-listing services;

– Completion of 3 major operational projects: migration of the Bergamo data centers and cash & derivatives to the Optiq trading platform and expansion of clearing activities in Europe;

– 2022 target, raised after a record first quarter: drop in operating costs to 612 million euros;

– Dividend 2021 of € 1.93, or a payout rate of 50%.

The negative effects of rising interest rates

Rising interest rates usually cause bank income to increase through loans. In Europe, according to a survey conducted by S&P of 85 banking institutions, the sector expects an average increase of 18% in the interest margin. However, this new inflationary environment also has undesirable effects, notably an increase in refinancing costs. It is also accompanied by the fear of a new recession, which would then affect all the bank’s activities, from loans to asset management, whose income is correlated to market valuations. Reassuring element: euro area banks are strong enough to cope with a deteriorating environment.

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