Morningstar | Strong Growth for LCH Kicks Off 2019 for London Stock Exchange
Wide-moat-rated London Stock Exchange reported decent fiscal first-quarter results that generally fit in with our overall thesis on the firm. For interim reports, LSE only discloses revenue and cost of sales. Total income was up 5% (which includes net treasury and other income), while gross profit was up 6%. While some segments underperformed our full-year growth expectations, other segments outperformed, roughly balancing out revenue growth compared with our projections. Therefore, we do not plan any material revisions to our fair value estimate of GBX 4,650 per share.The worries over the effects of Brexit on LSE’s over-the-counter clearing dominance appear to be waning, and the LCH segment outperformed during the quarter with total income up 17%, as SwapClear interest rate swap notional value was up 9%. Growth slowed a bit for the information services segment, with total revenue up 6% and total exchange-traded funds assets under management benchmarked up 5%. The market backdrop was a bit more challenging for the capital markets segment, where total revenue was down 9% as new issuance and money raised both declined in the quarter and trading activity across multiple products was also down. CC&G and Monte Titoli had a mixed quarter, as clearing revenue and net treasury income were up while settlement and custody-related revenue was down, leading to 3% growth in gross profit for the segment. Finally, technology services saw revenue growth of 9% year over year. Overall, a more challenging market environment weighed on asset-related index fees as well as the capital markets segment, but growth for OTC-related clearing remains superb. We like the product mix of LSE’s portfolio, and with any consistent rebound in market levels, growth should pick up for the rest of the year for information services and capital markets.
London Stock Exchange Group is a global markets infrastructure business based in the United Kingdom. Co's operating segments include: Information Services, which provides a range of information and data products including indexes and benchmarks; Post Trade Services LCH, which provides clearing services through which counterparty risk is mitigated across multiple asset classes; Capital Markets, provides access to capital for domestic and international businesses and electronic platforms for secondary market trading of equities, bonds and derivatives; and Group Technology, which provides secure technologies to customers that require performance at high levels of availability and throughput.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.