ASX:LNK

Stock Analysis Report

Link Administration Holdings

Executive Summary

Link Administration Holdings Limited provides technology-enabled administration solutions to companies, large asset owners, and trustees in Australia and internationally.


Snowflake Analysis

Undervalued with proven track record.

Share Price & News

How has Link Administration Holdings's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: LNK has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-3.9%

LNK

0.08%

AU IT

0.8%

AU Market


1 Year Return

-11.0%

LNK

32.2%

AU IT

15.3%

AU Market

Return vs Industry: LNK underperformed the Australian IT industry which returned 32.2% over the past year.

Return vs Market: LNK underperformed the Australian Market which returned 15.3% over the past year.


Shareholder returns

LNKIndustryMarket
7 Day-3.9%0.08%0.8%
30 Day-0.2%6.7%0.3%
90 Day11.3%13.2%5.3%
1 Year-7.9%-11.0%34.6%32.2%20.5%15.3%
3 Year-5.1%-16.9%68.1%54.0%37.4%18.8%
5 Yearn/a126.1%99.1%50.7%16.8%

Price Volatility Vs. Market

How volatile is Link Administration Holdings's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Link Administration Holdings undervalued compared to its fair value and its price relative to the market?

37.7%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: LNK (A$6.23) is trading below our estimate of fair value (A$10)

Significantly Below Fair Value: LNK is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: LNK is good value based on its PE Ratio (10.4x) compared to the IT industry average (22.6x).

PE vs Market: LNK is good value based on its PE Ratio (10.4x) compared to the Australian market (18.8x).


Price to Earnings Growth Ratio

PEG Ratio: LNK's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: LNK is good value based on its PB Ratio (1.5x) compared to the AU IT industry average (2.8x).


Next Steps

Future Growth

How is Link Administration Holdings forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?

-17.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: LNK's earnings are forecast to decline over the next 3 years (-17.4% per year).

Earnings vs Market: LNK's earnings are forecast to decline over the next 3 years (-17.4% per year).

High Growth Earnings: LNK's earnings are forecast to decline over the next 3 years.

Revenue vs Market: LNK's revenue (2.5% per year) is forecast to grow slower than the Australian market (4.2% per year).

High Growth Revenue: LNK's revenue (2.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: LNK's Return on Equity is forecast to be low in 3 years time (11.1%).


Next Steps

Past Performance

How has Link Administration Holdings performed over the past 5 years?

62.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: LNK has a large one-off gain of A$264.9M impacting its June 30 2019 financial results.

Growing Profit Margin: LNK's current net profit margins (22.7%) are higher than last year (11.8%).


Past Earnings Growth Analysis

Earnings Trend: LNK has become profitable over the past 5 years, growing earnings by 62.4% per year.

Accelerating Growth: LNK's earnings growth over the past year (124.6%) exceeds its 5-year average (62.4% per year).

Earnings vs Industry: LNK earnings growth over the past year (124.6%) exceeded the IT industry 28.4%.


Return on Equity

High ROE: LNK's Return on Equity (14.8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Link Administration Holdings's financial position?


Financial Position Analysis

Short Term Liabilities: LNK's short term assets (A$1.8B) exceed its short term liabilities (A$1.3B).

Long Term Liabilities: LNK's short term assets (A$1.8B) exceed its long term liabilities (A$1.4B).


Debt to Equity History and Analysis

Debt Level: LNK's debt to equity ratio (53.4%) is considered high.

Reducing Debt: LNK's debt to equity ratio has reduced from 1648.1% to 53.4% over the past 5 years.

Debt Coverage: LNK's debt is not well covered by operating cash flow (17%).

Interest Coverage: LNK's interest payments on its debt are well covered by EBIT (7.5x coverage).


Balance Sheet

Inventory Level: LNK has a low level of unsold assets or inventory.

Debt Coverage by Assets: LNK's debt is covered by short term assets (assets are 1.6x debt).


Next Steps

Dividend

What is Link Administration Holdings's current dividend yield, its reliability and sustainability?

3.29%

Current Dividend Yield


Dividend Yield vs Market

company3.3%marketbottom25%2.3%markettop25%5.5%industryaverage2.3%forecastin3Years3.3%

Current dividend yield vs market & industry

Notable Dividend: LNK's dividend (3.29%) is higher than the bottom 25% of dividend payers in the Australian market (2.29%).

High Dividend: LNK's dividend (3.29%) is low compared to the top 25% of dividend payers in the Australian market (5.49%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, LNK has been paying a dividend for less than 10 years.

Growing Dividend: LNK's dividend payments have increased, but the company has only paid a dividend for 3 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (34.2%), LNK's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: LNK's dividends in 3 years are forecast to be well covered by earnings (48.4% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

1.1yrs

Average management tenure


CEO

John McMurtrie 0

18.1yrs

Tenure

AU$1,338,569

Compensation

Mr. John M. McMurtrie, BEc, BEc(Hons), MEc, A.M., has been Chief Executive Officer and Managing Director at Superpartners Pty Ltd. since December 19, 2014. Mr. McMurtrie has been Managing Director and Exec ...


CEO Compensation Analysis

Compensation vs Market: John's total compensation ($USD895.66K) is below average for companies of similar size in the Australian market ($USD1.37M).

Compensation vs Earnings: John's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
John McMurtrie
MD & Executive Director18.1yrsAU$1.34m2.65% A$87.6m
Andrew MacLachlan
Chief Financial Officer1.1yrsAU$622.91k0.013% A$424.0k
Paul Gardiner
Chief Technology & Operations Officer1.1yrsAU$812.87k0.087% A$2.9m
Dee McGrath
Chief Executive Officer of Fund Administration0.8yrsAU$751.30k0.012% A$407.1k
Janine Rolfe
General Counsel & Company Secretary2.8yrsno datano data
Michael Rosmarin
Chief Human Resources & Brand Officer1.1yrsno datano data
Jackie Millan
Chief Financial Officer of Link Group EMEA2.3yrsno datano data
Craig Curry
Head of Investor Relations of Corporate Markets0yrsno datano data
Wendy Phillis
Chief Risk Officer0.7yrsno datano data
Robbie Hughes
Chief Executive Officer of Banking & Credit Management0.5yrsno datano data

1.1yrs

Average Tenure

Experienced Management: LNK's management team is not considered experienced ( 1.1 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
John McMurtrie
MD & Executive Director18.1yrsAU$1.34m2.65% A$87.6m
Peeyush Kumar Gupta
Independent Non-Executive Director3.3yrsAU$186.04k0.0086% A$285.7k
Andrew Green
Independent Non-Executive Director1.9yrsAU$289.76k0.0049% A$162.0k
Anne McDonald
Independent Non-Executive Director3.6yrsAU$186.04k0.0061% A$203.1k
Sally Anne Pitkin
Independent Non-Executive Director4.4yrsAU$214.74k0.013% A$439.2k
Michael Carapiet
Independent Chairman5yrsAU$365.60k0.33% A$10.9m
Fiona Trafford-Walker
Independent Non-Executive Director4.4yrsAU$218.33k0.0058% A$190.8k
Glen Boreham
Independent Non-Executive Director4.4yrsAU$211.15k0.019% A$643.2k

4.4yrs

Average Tenure

60.5yo

Average Age

Experienced Board: LNK's board of directors are considered experienced (4.4 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 7.2%.


Top Shareholders

Company Information

Link Administration Holdings Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Link Administration Holdings Limited
  • Ticker: LNK
  • Exchange: ASX
  • Founded: 2006
  • Industry: Data Processing and Outsourced Services
  • Sector: Software
  • Market Cap: AU$3.307b
  • Shares outstanding: 530.83m
  • Website: https://www.linkgroup.com

Number of Employees


Location

  • Link Administration Holdings Limited
  • 680 George Street
  • Level 12
  • Sydney
  • New South Wales
  • 2000
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
LNKASX (Australian Securities Exchange)YesOrdinary SharesAUAUDOct 2015
LNKCHIA (Chi-X Australia)YesOrdinary SharesAUAUDOct 2015
1LKDB (Deutsche Boerse AG)YesOrdinary SharesDEEUROct 2015

Biography

Link Administration Holdings Limited provides technology-enabled administration solutions to companies, large asset owners, and trustees in Australia and internationally. The company operates in four segments: Fund Administration, Corporate Markets, Technology & Innovation, and Link Asset Services. The Fund Administration segment provides core member and employer administration services; and a range of value-added services, including integrated clearinghouse, financial planning and advice, direct investment options, and trustee services. The Corporate Markets segment offers shareholder management and analytics, stakeholder engagement, share and unit registry, employee share plans, and company secretarial support services, as well as insolvency solutions. The Technology and Innovation segment provides services for the development and maintenance of proprietary IT systems and platforms; and value-added services of data analytics, digital solutions, and digital communications. The Link Asset Services segment provides a range of financial and administrative services comprising share registration and plan services, and treasury solutions; third-party administration and transfer agency services, and various investment funds; finance and accounting, company secretarial, entity management, trust, and inter-generational transfer services; and loan origination and servicing, debt work-out, compliance, and regulatory oversight services. The company was incorporated in 2006 and is headquartered in Sydney, Australia. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/19 10:49
End of Day Share Price2020/02/19 00:00
Earnings2019/06/30
Annual Earnings2019/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.