Corporate Action: We Advise Link Administration Shareholders to Take Up Their Entitlements

Sticky clients, growth and cost-out opportunities appeal, but integration risks weigh on valuations

Dominant market share and high revenue visibility should aid in crossing the valuation hurdle

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Equity Bottom-Up

Link Administration Holdings listed in October 2015 at AUD 6.37 per share, and its share price has been on a tear ever since. Currently trading at AUD 8.50, it's up 33% since listing, and now trades at a 55% premium to our AUD 5.50 fair value.We believe our cost-out expectations account for the difference between our valuation and the current share price. The divergence could also be explained by the market factoring in upside from acquisitions and using a lower discount rate. We expect EBITDA margins to firm from 25% in fiscal 2015 to 30% by fiscal 2020. We believe the market is banking on margins being well above historical levels as it benefits from operating leverage across its IT platform.Analysts: Nathan Zaia &amp; David Ellis

Link Administration Holdings listed in October 2015 at AUD 6.37 per share, and its share price has been on a tear ever since. Currently trading at AUD 8.50, it's up 33% since listing, and now trades at a 55% premium to our AUD 5.50 fair value.We believe our cost-out expectations account for the difference between our valuation and the current share price. The divergence could also be explained by the market factoring in upside from acquisitions and using a lower discount rate. We expect EBITDA margins to firm from 25% in fiscal 2015 to 30% by fiscal 2020. We believe the market is banking on margins being well above historical levels as it benefits from operating leverage across its IT platform.Analysts: Nathan Zaia &amp; David Ellis

Even With a New Pillar of Growth, Link Share Price Leaves Little Room for Disappointment