CTS Q2 profit: P32M (up 427% y/y)

CTS Global [CTS 0.65, up 3.2%; 119% avgVol] [link] posted a Q2 net income of P32 million, up 427% y/y from its Q2/23 net income of P6 million, and up 37% q/q from its Q1/24 net income of P24 million. CTS’s H1 revenues increased 160% to P89 million due to trading gains from CTS’s ability to “capitalize on the equities rally during the first half of 2024 as certain sectors thrived particularly in the big tech companies despite continued volatility due to inflation and geopolitical concerns among others.” CTS’s global trading desk produced P16.3 million in trading revenues (up 161% from an H1/23 loss of P26.5 million) and its local trading desk produced P23 million in trading revenues (up 206% from an H1/23 gain of P7.5 million). The remaining income came from interest earned off of CTS’s considerable government bond portfolio.

MB bottom-line: As much as I dump on CTS for being a boring bondholder during one of the biggest bull pumps in American stock market history, it’s nice to see the company flip the switch and get back to the business that it marketed to IPO buyers when it listed in 2022. Unfortunately, the data provided by the CTS management team is not particularly helpful to investors. What is it about this period that CTS was able to “capitalize” on that wasn’t present in previous periods? CTS specifically inferred that its investments in “big tech” in H1 were important to its outcome, but that uptrend started nearly two years ago. What is the investment thesis here? Is a bet on CTS a bet on "big tech", or did they already exit that trade? This is what I mean. What are we buying?

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