Computershare Limited

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Computershare Limited (ASX: CPU) is a transfer agent and investor service provider that offers employee equity plans, proxy solicitation, stakeholder communications, mortgage servicing, investor services, communication services and utilities, and issuer services.

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~29.57% of the total shareholding. AustralianSuper and Welas Pty. Ltd. hold a maximum stake in the company at ~10.91% and ~3.15%, respectively.

1.4 Key Metrics: CPU reported a net margin of 8.9% in FY22 compared to the industry median of 6.2%. Further, the company reported a high return on equity in FY22, around 10.2%, relative to the industry median of 3.0%. Below is captured the trend of the EBITDA margin and cash cycle days:

Section 2: Financial and Operational Highlights

2.1 Insights of FY22 (for the period ended 30 June 2022): During FY22, the company reported cash flow from operating activities of around USD 494.5mn compared to USD 306.6mn in FY21. The company also declared a final dividend of AU 30.0 cents per share, representing a growth of 30% YoY.  

The below picture depicts CPU acquisition strategies:

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is February 3, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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