Following yesterday’s announcement, shares of Link Administration Holdings Ltd [ASX:LNK] have dropped in value by 4.75%.
The IT service management company held their annual Investor Day in London yesterday, giving both investors and analysts the opportunity to meet their ‘recently refreshed’ global leadership team. Here, they also reconfirmed their guidance for this financial year.
Additionally, the company announced an extension of their contract with AustralianSuper for another four years, with the added options to roll AustralianSuper for each additional year.
The announcement, released after market close, has brought Link’s trading price down to $5.42 per share.
More on the Link update
Right off the bat, Link estimates this year’s operating earnings before interest, tax, depreciation and amortisation (EBITDA) to be between $350 and $335 million (last year’s guidance was $335 million), and their net profit after tax and amortisation (NPATA) to be between $195 and $205 million (down from $207 million last year).
However, they are reporting a one-year return of -23.95%, showing they have some damage control to conduct.
They also boast of being within a leading market position around attractive industries, obtaining a large and loyal client base, and are well positioned for continued growth. These clients include blue chips such as JP Morgan, Citi Group, Macquarie and National Asset Management Agency.
Despite the chaos of Brexit, the company also believes to be in a stable position to brave the European storm.
The company acknowledges that their contract extension with AustralianSuper comes within a ‘fundamental shift in the Australian wealth sector’ and believes the contract will draw upon the strengths of both companies to deliver the best services to consumers.
What does this mean for investors?
Over the last year, the company has experienced a number of insider transactions — the biggest being from Independent Chairman Michael Carapiet, with a purchase of $1.4 million worth of shares at $7 apiece. Company insiders such as Carapiet often trade in company stock, for one reason — they believe the price will rise. In 2018, insiders bought Link stock for a collective $2.7 million and didn’t sell.
It’s not the most important piece of Link’s news to pay attention to, but when assessing the latest news from the company, it’s important to remember that big players seem to have faith in Link’s future. Especially when we see small hiccups like this, and shareholders are tempted to sell.
For Money Morning
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