Link Administrative Holdings Ltd (ASX: LNK) administers financial ownership data, mainly fund administration (such as superannuation funds) and share registry services. Its key businesses are located in Australia and the United Kingdom (UK).
Link’s share price closed at $5.00 on 30 June 2019. This price is an all-time low since Link was listed on the ASX in October 2015, 44 per cent below the all-time high in November 2017 and February 2018 of around $9.00 and 36 per cent below the price of $7.76 on 30 May 2019.
The sharp fall in Link’s share price since late May 2019 is attributed to an earnings update issued on 31 May 2019 and further information provided at its annual Investor Day held on 18 June 2019. The issues causing the share price to fall mainly relate to higher costs than expected resulting from regulatory changes to superannuation in Australia, possible adverse implications of Brexit on Link’s UK businesses and regulatory concerns over Link’s administration of the failed of the Woodford funds in the UK. These issues are impacting negatively on Link’s earnings in FY19 and FY20.
The question is whether Link’s share price has bottomed. This may be the case given the end of the financial year means investors are no longer re-balancing their portfolios for tax reasons, the issues mentioned above seem to be short term problems, Link has reaffirmed savings flowing from its acquisition in the UK of Capita Asset Services’ in 2017, Link’s underlying businesses have a strong competitive position and remain stable (for example, Link announced on 18 June 2019 that it has extended its contract with Australian Super (one of Link’s major clients) for four years), and PEXA (an electronic system to settle real estate transactions in Australia) provides earnings upside in the years ahead.
This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978) (“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
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