Link Administration Holdings Limited

Proposed Legislative Changes in Superannuation: Link Administration Holdings Limited’s (ASX: LNK) stock tumbled 8.354 per cent on May 10, 2018 after the announcement on proposed legislative changes in superannuation and contract update. Particularly, Federal Budget has proposed some changes to the treatment of inactive superannuation accounts that could probably affect the company revenue. According to the release, the changed proposal indicates that the accounts with less than $6,000 and with no contributions for 13 months, will be transferred to the Australian Tax Office (ATO). Further, the Group has guided that this could reduce revenues basis a lower number of accounts that will be administered by the Group. However, Link cannot quantify the net effect of the proposed changes on Fund Administration revenue at this time. Moreover, Link Group will continue to work with its clients and industry participants in relation to proposed legislative changes in superannuation and keep the market informed. Besides this, Link advised that its contract for the provision of Fund Administration services to CareSuper will not be renewed. CareSuper represents approximately 1% of Link Group’s proforma revenue.


1HFY18 Financials - Fund Administration (Source: Company Reports)

On the other hand, one of its Director Anne McDonald, having an indirect interest in the Company acquired 5,000 shares via on-market trade, as at May 08, 2018. Besides this, Glen Boreham who has indirect interest in the company also acquired 819 fully paid ordinary shares through issue of securities under Link’s Dividend Reinvestment Plan. Challenger Limited and its entities, a substantial holder of Link Administration Holdings Ltd, changed its holding on April 24, 2018, from 6.17 per cent of the voting power to 7.31 per cent. Meanwhile, LNK stock (with a market capitalisation of over $4 bn) has declined 8.03 per cent in past one month as on May 09, 2018. As of now, we maintain our “Expensive” recommendation on the stock at the current market price of $ 7.240, considering many factors that are likely to impact top-line growth of the company.

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