ComputerShare (ASX: CPU) Is Reaching Its Historical Highs

  • Oct 08, 2018 AEDT
  • Team Kalkine
ComputerShare (ASX: CPU) Is Reaching Its Historical Highs

Dr. Paul Reynolds has been appointed to the Company’s Board as an independent non-executive director with effect from October 5, 2018, as announced recently by Computershare Limited.

The AGM of the company will be held at 10.00am on Wednesday 14 November 2018 at Computershare’s Global Headquarters, 452 Johnston Street, Abbotsford, Victoria.

Company is into the operation of a computer bureau, operation of share registries and the provision of software specializing in share registry, financial and stock markets, under the information technology sector.

In FY2018 Computershare (ASX: CPU) delivered the largest profit recorded in their history, with the fastest rate of earnings growth since FY2009. The company continues to make good progress in executing the growth, profitability and capital management strategies that are driving our solid performance. Importantly, they did what they said would do, and are delivering to plan.

FY2018 saw Computershare’s profit trajectory improve. The company upgraded their FY2018 earnings guidance twice during the year landing on “12.5% with a positive bias”. It is pleasing to deliver Management EPS growth of 14.1% in constant currency.

The Equatex acquisition is another highlight of the year, this purchase will enhance the scale, capabilities and earnings in employee share plans, and other strategic growth engine. Margin income also improved, reaching almost $100 million in the second half of the year, demonstrating the significant leverage they have to rising interest rates. Equatex is also an excellent geographic fit with their existing European share plans business and stands as one of the most significant acquisition since 2011.

An inherent feature of their business model, Computershare continues to generate strong free cash flow. This cash flow self-funds our technology initiatives, growth plans and strategic investments as well as supporting our share buy-back and reducing debt.

In FY2019, the company expect to deliver around 10% growth on FY2018 management EPS in constant currency. They expect stronger contributions from employee share plans, mortgage services and margin income, and will continue to execute our cost-out program. The outlook for corporate actions and fee income from some of the larger events looks slightly more subdued at this stage than in FY2018.

With contributions from their growth engines, cyclical improvements and increases in event-based activity, particularly in the first half. Looking at the FY2018 results, total management revenue increased by an impressive $133.7 million. 

Within the business service, and UK mortgage services revenues were stable at $240.1 million, mortgage services revenues increased by 9.9% to $546.2 million, US mortgage services revenues broke through $300 million, up 19%. Total accounts for more than 40% of the revenues. Computershare is becoming predictable, more profitable and transparent.

Amid all the red on today's market Computershare is reaching historical (52-week) highs at $20.80. This puts the value of founder and chairman share at $680 million. Over the period of last one year the stock has seen an attractive performance change of about 43.82%.

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