One stock in the S&P/ASX 300 Index (ASX: XKO) is being obliterated today after revealing its first-half FY25 performance to date.
Shares in the online foreign exchange OFX Group Ltd (ASX: OFX) are 32.5% deep in the dirt this afternoon. The disappointing performance stands out like a sore thumb, with the benchmark index tracking up 0.6% for the day.
Heading into today, OFX Group touted a one-year return of around 36%. However, investors' lickety-split exodus has left the ASX small-cap company 7% in the red over the past 12 months. Within a single trading day, OFX Group has whipped from 11 cents away from its 52-week high to 34 cents away from its 52-week low.
What could possibly induce such a violent swing in an ASX 300 stock?
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Growth goes on hiatus
OFX Group shared its trading update for the first half today. Inside were a few important points, including:
- Net operating income of $111 million expected for the half
- Underlying EBITDA of $29 million expected for the half
- United Kingdom average transaction values down 21.8% on the prior corresponding period
- New corporate clients revenue up 11% on the prior corresponding period
The company didn't provide the potential increase or decrease from last year's first half, but I did some digging. If OFX's expectations are accurate, it would mean a 3.6% decline in net operating income and an 8.8% fall in underlying EBITDA (also known as operating earnings).
One primary reason was given for the slowdown. As mentioned in the OFX update:
Later than anticipated shifts in the interest rate cycle, and corresponding range-bound key currency corridors as a result of the strong USD, resulted in a slower rebound in corporate confidence.
From there, it was explained that these circumstances weighed on their clients' currency trading in the backend of the first half, most notably in September. The subdued level of trading meant OFX Group generated fewer fees and trading income.
What about the outlook for this ASX 300 stock?
At least there's a silver lining within today's update.
According to the release, OFX anticipates a stronger six months in the second half of FY25, improving on the first half and the prior corresponding period. However, it still means OFX Group no longer believes it will achieve ~10% net operating income (NOI) growth.
For shareholders choosing to stick with this ASX 300 stock, OFX plans to outline a 'pathway' for returning to 10% NOI growth alongside its FY25 results in May next year.
Furthermore, management remains committed to achieving 15%-plus NOI annual growth and approximately 30% underlying EBITDA margins in the long-term.
