Iress Limited

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Iress Limited (ASX: IRE) offers information, trading, compliance, portfolio management, order management, wealth management, and related tools. The company has its business operations across Asia-Pacific, Australia, North America, Africa, and the UK & Europe. The company was listed on ASX in 2000, and its software is utilised by more than 500,000 users worldwide.  

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

1.3 Top 10 Shareholders: The top 10 shareholders together form ~49.72% of the total shareholding. Challenger Managed Investments Ltd. and Greencape Capital Pty. Ltd. hold a maximum stake in the company at ~7.19% and ~7.07%, respectively.

1.4 Key Metrics: During FY22, the company reported a gross margin of 90.9%, higher than the industry median figure of 85.2%. Below is captured the trend of the asset turnover ratio and current ratio:

Section 2: Financial and Operational Highlights

2.1 Insights of 1HFY22: The company remains on track to leverage the cloud infrastructure on the back of higher demand from its clients. IRE has invested AUD 30mn for the transition to the new single technology platform and operating model.

2.2 Growth Strategies: The board declared an interim dividend of 16 cents per share (franked at 25%) in 1HFY22. The company remains on track to maintain a payout ratio of 80% of normalised NPAT annually. In addition, the commercial launch of IRE’s new, integrated investment infrastructure demonstrates its vision to drive broad market adoption and accelerate revenue growth.

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: P/E 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 October 21, 2022. 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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