Wed August 22 ISD Reports

The Macquarie View

1. While FY18e guidance has been reaffirmed, it implies a material deterioration YoY.
2. Industry feedback suggests competitive pressures and client budget sensitivity are likely to continue to weigh on ISD’s core ANZ franchise into FY19e,
3. while potential copyright cost inflation adds risk.
4. The Asia turnaround will be predicated on both operational and product improvements to drive conversion, which remain unproven, in our view.
5. While optically valuation appears undemanding, evidence of a stabilisation in the earnings base is required given downside risks. Underperform.