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Link Administrative Holdings Hits All-Time Lows

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

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).

LNK-stock-price

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.


 

Disclaimer:

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).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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