On 21 May 2019, Computershare Limited (ASX: CPU) released the investor presentation that was presented by the management to the investors and analysts at its annual Investor Day.
The presentation covered the execution priorities of the company, which includes the following:
- Leveraging of core Registry franchise to create and develop new complementary markets and growth opportunities.
- Continued careful expansion of US Mortgage Services.
- Migration as well as the restructuring of UK Mortgage Services.
- Integrating technologies along with upgrading toolkit for driving growth in Employee Share Plans (ESP)
- Disciplined cost management and capital management.
The management highlighted in its presentation that the Management EPS for FY19 in constant currency would increase by ~ 12.5%.
The Issuer Services CEO Naz Sarkar reported on the new Issuer Services where the current set of Registry and related services of the company will be brought together into single, cohesive, global Issuer Services business.
The company at present is the leading global provider of a range of services in all key markets with a robust and enduring client relationship. Register Maintenance continues to deliver consistent, recurring revenues. The initiatives taken by the front office are re-energizing the business. The front office focuses on strong client retention rates and improvement in all major index market share, improving IPO win rates followed by competitive wins across the world.
Going forward, the company is developing new growth opportunities where the client and market needs are changing and generating new structural growth. The company is well positioned to take advantage of these opportunities, where it can extend Issuer Services into new, growing markets.
Register Maintenance business of the company forms a part of a wider Issuer Services portfolio that is well established in the key markets and has further scope for grow. Under this vertical, the estimated total available revenue in chosen markets is around $1.42 billion. The total global Computershare revenue for the chosen market is around $710 million.
For the next stages of growth of Issuer Services, CPU is developing adjacent market opportunities. The US Registered Agent has an estimated market size of over $600 million, which is dominated by two large providers and a number of boutique firms. The company has established a new service, with the focus on improved technology, greater transparency, enterprise scale as well as an integrated service offering.
Private markets have an estimated market size of over $1 billion, with upwards of 50% in the US. The business either remain private or de-list require compliance and governance services more typically related with public companies. Here, CPU is making it easier for the companies of different sizes to select solutions which suit best as per their requirement, and at the same time adding services as their business grows.
Corporate services have an estimated market size of over $1 billion. There are small regional practices in Hong Kong, South Africa and the Channel Islands. The company will continue to develop these and at the same time, evaluate other opportunities to expand offerings as well as accelerate growth.
The company has laid out an Execution Roadmap for its Issuer Services business and it is evolving to meet the growing needs of its global issuer client base.
The highlights on the Mortgage Services was provided by Nick Oldfield.
In the US, mortgage services are well positioned for further growth. Currently the company has grown the portfolio to $100bn, the company expects to continue steady and disciplined rate of growth.
On the UK Mortgage services front, the company is restructuring its UK Mortgage services business and plans to substantially reduce cost base to position for future profitability. As per the initial estimate, the mortgage market has potential ~ $85 million of cost benefits over three years.
There is ongoing US expansion of mortgage services where stage 1 of the build is completed and is positioned for continued and disciplined growth with the focus on margin improvement.
The details on the Employee Share Plans business was provided by its CEO Francis Catterall.
There is an ongoing structural growth in the ESP market and positive governance and remuneration trends, which drives demand for global plans market services. At present, the ESP business of the company is the largest global employee share plans provider in the world. It is launched as one of Asia’s largest ESP.
The shares of CPU closed the day’s trade at A$16.470 (as on 21 May 2019), down by 8.5% as compared to the previous closing price. CPU holds a market cap of A$9.77bn and 542.96m outstanding shares.