Growth Focus: Link Administration Holdings Ltd (LNK)

by Patrick Taylor

Date of Data Capture: 10/3/2017


Classification: Business Support Services

Current Price: $7.84

Market Capitalisation: $2.82B

Forecast EBITDA Growth: 25.29%

Gross Yield: 2.18%

Consensus Price Target: $8.29

# Covering Analysts: 5

Discount at Current Price: 5.8%

Price Target Trend: Flat

Signal Time Frame: Monthly-Weekly-Daily

Trend Bias: Up Flat; Medium-Short

Short-term: Positive
Medium-term: Positive Neutral
Long-term: Positive

Recommendation: Buy

Focus: Capital Growth

Set up Notes:
• Upon listing LNK rallied 30% in 6 months before consolidating back to baseline just 3 months later. They are now emerging from this base and look to be re-entering a longer-term uptrend.
• Sector and fundamental strength give support to a favourable outlook with good forecast growth seen in earnings, profits and margins.
• Positive short and medium-term signalling have been joined by a freshly green long-term signal that came through just as linear resistance broke last week. We expect this uptrend to continue with obvious resistance targets overhead at $8.00, $8.20 and $8.80 with good support layered down from $7.70 to $7.00.

Growth Focus: Link Administration Holdings Ltd (LNK)

Our primary focus here is capital gain, we will select our stocks from the ASX top 500 All Ordinaries Index.

With further growth expected across the Australian superannuation industry we are looking to weave together solid fundamental forecasts, exciting technical outlook and a high potential set-up in our attempt to net a profit. Link Administration Holdings Ltd (LNK) has all the points mentioned, and while it can sometimes be tricky to connect the dots correctly, with Link we think we have made the right connection.

Starting out in New Zealand 2005, Link has since headquartered in Sydney and grown operationally across countries including Australia, South Africa, India, Germany and Hong Kong. With customers like AustralianSuper and REST, LNK businesses cover fund administration, corporate markets and information/data servicing. They are the top superannuation software company in Australia with defensive earnings and revenue coupled with recent signs of recovery growth and are attached to some exciting fundamental forecasts which should combine well.

While excellent price growth has been seen across the superannuation services sector recently, Link spent the majority of 2016 weakening off until finally coming loose at the end and whipping down almost 30% from their mid-year peak. Since then they have steadied above $7 support before breaking through primary linear resistance last week and have technical indicators turning positive across multiple timeframes in tandem right now.

In the 18 months since listing they have gone through the well-worn channel where a company gets an initial IPO-pop and price rally which is then followed by a dip that clears the stag profits. This is normally a small-scale boom and bust cycle that establishes primary support and resistance and basically sets the stage for the development of the company in the market going forward. This is what we have here – on a very large scale – registered in the monthly timeframe and representing a very large pattern with significant potential.

With further broad growth expected across the sector, Link is well situated and should see strong fundamental conditions unite well with improving price performance and positive signalling now seen in the longer-term timeframe. This longer range setup ties in well with pre-existing uptrends currently ongoing in the medium and shorter-term timeframes and should allow prices to hitch higher yet. For all these reasons we think your portfolio might just have a missing Link.


This report was produced by Taylor Securities Pty Ltd, which is a Corporate Authorised Representative (Number 414063) of Bespoke Portfolio Pty Ltd (AFSL 341991). Taylor Securities and Patrick Taylor (Representative number 414064) have made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Taylor Securities and Patrick Taylor does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities or financial products. The securities or financial products recommended by Taylor Securities and Patrick Taylor carry no guarantee with respect to return of capital or the market value of those securities or financial products. There are general risks associated with any investment in securities or financial products. Investors should be aware that these risks might result in loss of income and capital invested. Neither Taylor Securities and Patrick Taylor nor any of its associates guarantees the repayment of capital. WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.

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