OTC Markets Group

US: OTCM

Market Cap$691.6m

Last Close $58.72

OTC Markets Group operates the OTCQX, OTCQB and Pink financial markets for over 11,000 US and global securities. OTC Link LLC, a member of FINRA, operates OTC Link ATS and OTC Link ECN, both SEC-registered Alternative Trading Systems. In FY20 c 82% of revenues were of a subscription-based recurring nature and 78% in Q321.

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Investment summary

OTC Markets Group’s (OTCM’s) Q321 revenues were 20% ahead of our expectations, driven by trading (+22%), Market Data Licensing operations, which we consider to be a high-value business (+6%) and Corporate Services (+32%). Net acquisition of corporate clients has tempered marginally from Q221 but remains elevated, which bodes well despite a likely normalisation in trading activity. We raise our EPS forecast by 8% for 2021 and 14% for 2022. Management’s confidence prompted it to maintain the quarterly dividend at $0.18/share and to announce a special dividend of $1.50, and we expect the group to pay a similar special dividend in 2022.

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2019A 62.8 19.4 18.0 124.7 47.1 32.1
2020A 71.2 23.2 21.4 153.4 38.3 26.2
2021E 97.9 37.4 35.6 232.9 25.2 19.1
2022E 88.5 36.6 34.8 234.6 25.0 19.5
Industry outlook

Following Q221, there are further signs that US equity trading activity continues to normalise, and we have assumed this in our forecasts while acknowledging that it is not possible to estimate with any degree of confidence. Net acquisition of corporate clients has accelerated, which bodes well despite a likely normalisation of trading activity. We raised our EPS forecast by 12% for 2021 and 19% for 2022. Management’s confidence in the business has prompted it to increase the quarterly dividend to $0.18 from $0.15 and we expect the group to pay a special dividend of 65c in 2021 and 75c in 2022.

Last updated on 01/12/2021
Content on OTC Markets Group
OTC Markets Group – Hitting it out of the ballpark
Financials | Update | 24 November 2021
stock-1863880
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Share price graph
Balance sheet
Forecast net debt (US$m) 41.2
Forecast gearing ratio (%) 176
Price performance
%
1m
3m
12m
Actual 17.4 28.3 70.4
Relative* 20.1 28.7 38.3
52-week high/low US$60.0/US$33.5
*% relative to local index
Key management
Cromwell Coulson CEO
Antonia Georgieva CFO

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