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28 February 2020

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London Stock Exchange – FY Results 

Share Price 7810p

Mkt Cap £27.3bn

Conflict Disclosure: No Holding

  • Results Revenue up 8% to £2.06bn with total costs up 7%. Adjusted operating profit up 14% to £1.06bn. Adjusted EPS up 15% to 200.3p. Dividend up 16% to 70p. Capital markets revenues were up 5% to £426m, information services up 7% to £902m, post trade up 13% to £550m at LCh and flat at CC7G and Monte Titoli. Acquisition of Refinitiv is said to be on track to complete in H2.
  • Estimates This looks like a 9% beat. Forecasts anticip[ate 17% PBt growth.
  • Valuation PER is an eye watering 34.6X. 1% yield.
  • Culture The gender pay gap is a modest 15% which is good for the financial services industry.
  • Conclusion Back in 2010 it was hard to persuade investors to own this unique asset at 17X. The shares were £5.50 then. I find myself wondering if the acquisition of Refinitiv may make progress harder going forward. Particularly if Bloomberg won the election and sold his business.

1 August 2019

London Stock Exchange – H1 Results and Acquisition  

Share Price 6626p

Mkt Cap £23,171m

Conflict Disclosure: No Holding

  • Results/Acquisition The acquisition of Refinitiv is for $27bn in an all share deal. Combined annual revenues are expected to be £6bn and grow at 5-7%. Cost synergies are targeted at £350m over 5 years and the EBITDA margin target is 50% “in the medium term”. H1 results for LSE showed revenue up 8% to £1,018m and operating profit up 11% to £533m, a margin of 52%. Net debt was £870m.
  • Estimates & Valuation Clear financial guidance gives revenues of £6bn and a 50% EBITDA target which is £3bn. Refinitiv brings net debt of $12.5bn.  EV/EBITDA would therefore be 15.3X on a pro forma basis.  Pre the deal the LSE trades on a PER of 34X and yields 1%
  • Conclusion The shares aren’t cheap but strategically this moves the LSE to a strong position. I suspect the market will applaud.

29 July 2019

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London Stock Exchange – Potential Acquisition  

Share Price 5672p

Mkt Cap £19.8bn

Conflict Disclosure: No holding

  • Acquisition. LSE is in advanced talks to acquire Refinitiv. The acquisition of Refinitiv from Balckstone adds Eikon, Tradeweb and FXAll to the LSE’s stable for £20bn. Refinitiv has 40,000 customers and 150,000 data sources.
  • Conclusion  Bloomberg is cited as the main competitor. But Bloomberg has c.340,000 terminals globally which is 8.5X more than Refinitiv’s customer numbers. Bloomberg;s revenues are c $10bn.  I am struggling to see this as competition from Bloomberg just yet.