IFX Group (IXF)

The recovery at IFX Group, enacted by its chief executive Edmond Warner, is finally bearing fruit. Yesterday, the foreign exchange trading and spread-betting firm said its profits for the year ending 31 March would come in at 3.4m, more than the 3.1m forecast by analysts. This performance represents a near doubling on the profits achieved by IFX in 2005.

Since Mr Warner took over in 2003 he has focused it on providing equity products, through Finspreads, and on foreign exchange. More recently he has opened an office in Shanghai offering spread-betting. Given the Chinese love of gambling, the potential market is huge.

Spread betting allows investors to take positions in the stock or foreign exchange markets. It enables punters to gear up their bets - that is, cash in on movements in valuations with only a small outlay of capital - and avoid paying tax on any profits they may make. The recent boom in the UK stock market has been particularly good news for Finspreads.

The IFX boss believes his work is now done and plans to quit this year. He will leave it with 19.5m of cash on its balance sheet, up from 16.8m last year, which accounts for about half the group's market capitalisation. Strip this out and the shares trade at just nine times forecast earnings for this year. This is a significant discount to the rating enjoyed by the quoted rivals IG Group and London Capital, which is unwarranted. Buy.

Based on panmures figures

Currently trading on 2006E on PE of 16x someway off the 20x of of IGG at present.

Sales, PBTA, EPS, DPS, PE
26.7, 3.5, 8.3, 1.5, 16.2

Looks like the re-rating is underway - or could it be a potential takeover candidate :)

A potential takeover target it was then :)

LONDON (Reuters) - Shares in financial trading and spread betting company IFX Group hit 4-year highs on Wednesday after rival City Index confirmed it had made an approach regarding a possible offer for IFX.

City Index said its initial approach on March 23 was rejected and that it was evaluating whether to make a further approach.

In a separate statement IFX said it was not currently in any discussions that might lead to an offer.

Shares in IFX were up 8.3 percent at 168 pence by 8:20 a.m., after peaking at 172-1/2 pence, valuing the group at around 48.5 million pounds.