(BFM Bourse) – Driven by an economic model impervious to the health crisis and by the appetite of individual investors, the FDJ share delivers one of the very best performances of the SBF 120 over its first year of listing.
A crisis? What crisis? One year later his remarkable arrival at the Paris Stock Exchange On November 21, 2019, FDJ shares posted a spectacular performance of + 75%, within an SBF which still gave up nearly 8% over the period, despite the vigorous rebound observed over the past 3 weeks.
“The title even paid the luxury of registering a historic high of 35.81 euros on October 15, after having hit a low of 18.3 euros on March 17,” which represents a rebound of 95% over the period, underlines Antoine Fraysse-Soulier, head of market analysis at eToro. Shortly after the opening this Friday, November 20, the title returned to close to its ceiling thanks to a gain of 1.1% to 34.88 euros.
Largest listing in France since Natixis in 2006, the first steps of the heir to the national lottery did not go unnoticed, by attracting half a million individuals. To convince small carriers that the 2008 crisis had distanced them from the markets, the FDJ and its main shareholder, the State, did not skimp on the means, by granting them a discount of 2% compared to the introductory price. (reduced from 19.90 to 19.50 euros) as well as the granting of one free share for ten purchased, if they keep them for 18 months, i.e. until May 21.
450,000 individuals in the capital
“We have observed a significant return from individual investors on the occasion of this introduction”, underlines Stéphane Boujnah, head of Euronext, manager of the Paris Stock Exchange. “In the end, for the FDJ, the share allocated to individuals amounted to 45%, against 20 to 25% in general,” said Camille Leca, head of listing activities for France at Euronext.
A year later, the FDJ therefore won its stock market letters of nobility by recording the 8th best performance of the SBF 120. “It is really a beautiful story which has made it possible to reconcile the French with somewhat risky savings, because the performances are worthy of the American values of tech “which pierce the ceiling on Wall Street, underlines Florence Barjou, director of investments at Lyxor AM.
The success with private investors, whose number is now estimated at 450,000 by Stéphane Pallez, has not been denied. “It is clear that the movement initiated with the FDJ marked the beginning of a deeper trend of return of small shareholders”, observes Stéphane Boujnah. “And many young people have opened securities accounts for the first time in a world until now dominated by retirees.” According to the Autorité des marchés financiers (AMF), “more than 150,000 new investors bought shares of SBF 120 in March 2020”.
“The Covid-19 also played a role, because when people are afraid, they save. However, without taking any risk, this saving currently does not bring in anything”, notes Jean-Pierre Pinatton, member of the supervisory board of the broker Oddo BHF. Across all Euronext markets, namely Paris, Brussels, Lisbon, Oslo, Dublin and Amsterdam, “at the end of October 2020, individuals represented 5.4% of trading volumes, against 3.8% in 2019”, details Camille Leca.
Anti-crisis value par excellence
In fact, “despite an unprecedented health crisis and a period of confinement which resulted in the closure of many points of sale and the cancellation of almost all sporting events for four months, the FDJ succeeded in get through the crisis “notes Antoine Fraysse-Soulier. “The results of the third quarter prove it (…) with a growth in players’ stakes of 6% going to 4.4 billion euros” he adds, specifying that the group has among others took advantage of the postponement of many sporting events that have boosted online betting. “These good figures are also due to the quality of its management, the savings plan of 80 million euros having increased its gross operating margin (+ 0.4% to 21%, Editor’s note)” specifies- he.
Antoine Fraysse-Soulier also recalls that the group enjoys a “situation – very rare in the economic world – of monopoly” and that it is “in a structurally buoyant sector because player bets have recorded an average growth of 5 % on average over the last 25 years, which is quite impressive “. “The group enjoys enormous visibility and it is quite rare to have so much security on a title,” he says again.
In a context still very uncertain, caution has not disappeared: “We clearly have a deadline next May” with individuals who have kept their securities for 18 months, explains Stéphane Pallez. “But what has happened over the past year is proof of our strength.” For Jean-Pierre Pinatton, there are also reasons to remain positive, because “those who do not need the money will not touch their shares and those who need it generally sell the securities which have disappointed them. which is not at all the case with the FDJ “.
“There could be some profit taking but I can’t imagine a massive flight of small holders because the stock is seen as a good man’s stock, but is also a return stock with an annual dividend – which,” only downside, “was reduced by 30% for the 2019 financial year – quite interesting” also considers Antoine Fraysse-Soulier.
The title will however “not repeat its performance of 2020 in 2021” he says, “otherwise there would be a big disconnection”. In fact, the Française des Jeux already enjoys a “high valuation” (at nearly 6.6 billion euros at closing Thursday, Editor’s note) and its action is currently paying 33 times the estimated profits for 2021, against 22 times during its IPO “.” By way of comparison, William Hill (an English competitor specializing in online games and betting but who is not a lottery operator, Editor’s note) shows a PER (price-to-earnings ratio, Editor’s note ) of 15 “notes Antoine Fraysse-Soulier.
Lastly, the head of market research at eToro underlines that the sector rotation at work on the Parisian market benefits the “value” theme, to the detriment of growth stocks like FDJ which could therefore “perform less well in 2021”.
Quentin Soubranne – ©2020 BFM Bourse