@Hoarding, "With the share price as a guide, I was anticipating...

@Hoarding,

"With the share price as a guide, I was anticipating some negative news about fee indexation in Australia or the reintroduction of a fee freeze in the US."

That is an critical aspect which I think is almost never factored into the valuation of this stock, resulting in it often trading at significant premium valuation multiples compared to the overall market multiples.

But for a stock to trade at a sustained premium-to-market valuation metrics requires it to have superior attributes and one of those attributes is the ability to have control over what clients get charged for the service being provided, i.e., pricing power.

And one of the quality limitations with this business is that its customers are essentially governments around the world, and what SHL and its competitors get paid is determined by government officials [*].

So the way to get ahead in this game and to grow earnings, which - give the devil it's due - SHL has done very well over a long period of time, is to drive volume growth and thereby fractionalise fixed cost overheads.

But the point being made in light of your post about fee pressures from indebted governments is that while it has always been a risk, I think it is a risk which has become elevated in recent years.

Of course, successful investing requires not just understanding what is happening, but to what extent the market is already pricing in what is happening.

[*] Yes, patients are on whom the tests get done and the doctors of those patients are the ones that commission the tests, but in my book the definition of "customer" is not necessarily the person/entity that receives the service; rather, it is the person/entity that actually pays for the service being delivered).

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