External reports (aggregated public sources), Value Investors Club

Value Investors Club (VIC)

External reports (aggregated public sources)

Value Investors Club

Equity Bottom-Up

London Stock Exchange Group / Equity Bottom-Up

<ul><li>LSEG is shifting from a transactional exchange operator to a data and info services company</li><li>Expected low-teens EPS growth and 20% IRR in the medium term</li><li>Operates in financial data/analytics and market infrastructure, offering long-term investment potential</li></ul><p><em>This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.</em></p>

LSEG is shifting from a transactional exchange operator to a data and info services companyExpected low-teens EPS growth and 20% IRR in the medium termOperates in financial data/analytics and market infrastructure, offering long-term investment potentialThis content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

London Stock Exchange Group (LSEG LN) - Wednesday, Aug 14, 2024

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Hong Kong Exchanges and Clearing / Equity Bottom-Up

Hong Kong Exchanges and Clearing (388 HK)

<ul>
<li>The top line of <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> is down 7% YoY, the next major income line is down 3% YoY while operating costs are up 8% YoY, in 1Q24.</li>
<li>Average daily turnover is down 22% YoY, and to us this is the main story, a marginalization of the Hong Kong Exchange. </li>
<li>Geopolitical risks remain high, the historical positioning of Hong Kong is less relevant today, with worsening economic concerns in China, in close proximity. </li>
</ul>


The top line of HKEX (388 HK) is down 7% YoY, the next major income line is down 3% YoY while operating costs are up 8% YoY, in 1Q24.
Average daily turnover is down 22% YoY, and to us this is the main story, a marginalization of the Hong Kong Exchange. 
Geopolitical risks remain high, the historical positioning of Hong Kong is less relevant today, with worsening economic concerns in China, in close proximity. 


HKEX - Revenue Down, Investment Income Down, Operating Costs Up, Will It All Reverse?

<ul>
<li>Even the company itself shows in its recent presentation that a substantial portion of its revenue growth was due to rising rates on its cash deposit balances. This should wane. </li>
<li>The company's effective tax rate moved from 14% in the past few years, when it was stable to 10% in most recent period, this is not a core positive attribute. </li>
<li>Geopolitical risk, economic malaise in both Hong Kong and China, can lead to less interest in the market, trading, placements, perhaps suggesting its 6x PB is not warranted?</li>
</ul>


Even the company itself shows in its recent presentation that a substantial portion of its revenue growth was due to rising rates on its cash deposit balances. This should wane. 
The company's effective tax rate moved from 14% in the past few years, when it was stable to 10% in most recent period, this is not a core positive attribute. 
Geopolitical risk, economic malaise in both Hong Kong and China, can lead to less interest in the market, trading, placements, perhaps suggesting its 6x PB is not warranted?


Hong Kong Exchanges - Key Earnings Delta Was Rising Rates, Net Profit Inflated from Lower Taxation

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

<ul>
<li>We rate Japan Exchange as our 2024 high conviction buy in exchanges, for its attractive valuations, as well as its potential for increased market activity and big data revenue growth</li>
<li>We believe that Japan Exchange is the exception to the rule that DM exchanges need to diversify their revenue bases, as it is under less de-regulatory pressure</li>
<li>We also stick with Hong Kong Exchange as the deep value pick, as well as Deutsche Borse; we remain negative on Coinbase</li>
</ul>


We rate Japan Exchange as our 2024 high conviction buy in exchanges, for its attractive valuations, as well as its potential for increased market activity and big data revenue growth
We believe that Japan Exchange is the exception to the rule that DM exchanges need to diversify their revenue bases, as it is under less de-regulatory pressure
We also stick with Hong Kong Exchange as the deep value pick, as well as Deutsche Borse; we remain negative on Coinbase


Global Exchanges – Japan Exchange Is Our 2024 High Conviction Call

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

<ul>
<li>Percentage of UK funds invested in the LSE Group has risen from under 10% in 2012 to a record 41.8% today</li>
<li>Rise in ownership has been driven by high growth investors, with both Aggressive Growth and Growth strategies at their highest levels of ownership on record</li>
<li>The LSE Group has risen to the 22nd most widely held stock in the UK and the 12th largest on an average weight basis.</li>
</ul>


Percentage of UK funds invested in the LSE Group has risen from under 10% in 2012 to a record 41.8% today
Rise in ownership has been driven by high growth investors, with both Aggressive Growth and Growth strategies at their highest levels of ownership on record
The LSE Group has risen to the 22nd most widely held stock in the UK and the 12th largest on an average weight basis.


London Stock Exchange Group: Record Holdings

United Kingdom

London Stock Exchange Group plc (LSEG) is a global financial markets infrastructure and data provider. The group offers services in data, analytics, capital formation, trade execution, clearing, and risk management. It is headquartered in London, England, and was created in October 2007 through the merger of London Stock Exchange and Borsa Italiana.

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London Stock Exchange Group (LSEG LN)