For a large IPO such as Link I always think it is worth some analysis given that it is easy to get set with large numbers and there is liquidity to get out.
So, herewith my analysis :
BENCHMARKS
Have compared with Computershare, Iress and Veda in Australia and SS&C Technologies , Advent, DST Systems and NASDAQ in USA . All these benchmarks have been mentioned in various articles and the Prospectus.
PROFITABILITY
EBITA margin for Link at 23% versus range of 12 to 43% for other players
EBIT margin for Link is 15% versus range of 11 to 35% for other players.
A very profitable industry in terms of sales margins.
Have considered both EBITA and EBIT due to many players amortising software and intangibles.
ASSET MANAGEMENT
Again a very profitable industry with Link earning 68% on tangible assets versus other players in the range 13 to 107% .
PRICING
Similar to vitamins, this industry is very expensive to buy into.
Have made detailed comparisons between EBIT and EBITA valuations together with separating valuations between smaller and larger players as identified in the benchmarks above.
The valuations are very close and on balance my valuation shows Link around $6 on listing.
If you take SS&C Technologies then Link is worth a lot more than $6 on listing.
However, I do not believe that Link can be priced based on one company which is trading at stratospheric valuations .
CONCLUSION
It will be madness bidding into the broker firm allocation as you well get final price and may get totally roasted.
I think that a small to medium sized bet at the bottom of the range price of $5.41 in the Institutional Bidding process may provide you with a 5 to 10 percent stag.
FEEDBACK PLEASE
What are you planning to do with Link. I do not think we should totally ignore it.
Please let me know your views and what are you hearing .
