Pitch: Provider of services to UK housing and mortgage market at 8xNOPAT. Only 25% of revenue is exposed directly to the housing cycle. The key asset is the Financial Services Network which acts as a middleman between UK lenders/insurers and the independent mortgage/insurance brokers providing compliance infrastructure and enabling benefits of scale to smaller players in a fragmented market. Expected to rerate due to (1) upgraded management team driving growth, (2)new initiatives coming to fruition, and (3) continued improvement in investor comms.
Valuation: LSL.L currently trades at 6.5x EBIT and 8x NOPAT assuming reversion to more normalized 2019 levels. SOTP valuation results in £7.58 target with individual divisions values at 10x -16x EBIT multiples.
Exp. gain: +100% to £7.58.
Full LSL.L write-up (free guest account required):