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Analyse aandeel Wolters Kluwer

Wolters Kluwer bedient diverse nichemarkten waar weinig andere aanbieders zijn. Als gevolg hiervan zijn de prijzen bij de grote spelers meer rationeel. (Engelstalig rapport)

Liang Feng 16 mei, 2014 | 16:04

INVESTMENT THESIS

Wolters Kluwer has historically served as a leading print publisher of professional information materials in the legal and regulatory, tax and accounting, health, and financial sectors. However, the emergence of electronic platforms displaced print demand and necessitated a shift in the firm's focus, as print sales have declined by more than 5% annually over the past five years. In reaction, Wolters allocated approximately 8%-10% of annual revenue to develop new digital products, and has spent over EUR 2 billion net on acquisitions over the past decade to build its digital and services capabilities.

However, the transition has not been entirely seamless. Wolters is still a leader in the digital information industry, as the company owns leading publishing brands, and benefits from extensive relationships with both institutional clients and industry insiders. However, the digital transition has diminished the importance of publishing brands, in our view, and has created an opening for competitors with lesser publishing brands (or those with none at all) to gain ground in the space, by developing innovative software solutions and services. Despite the company’s large investments, for instance, it generated less ordinary EBITA in 2013 than it did in 2001, and electronic revenue growth has struggled to outpace print declines, resulting in tepid organic sales during much of this period.

Still, we think Wolters Kluwer has made steady progress and is now close to a turning point. Total electronic and service revenue now represent over half of total revenue and have outpaced the broader firm's growth. Because these offerings are largely subscription-based, recurring sales also now account for approximately 75% of revenue. We believe there is an opportunity for electronic tools to automate more processes in the professional's workflow, which should create more growth opportunities and increase the stickiness of Wolters' product portfolio. The weak economic conditions in Europe are hiding much of this progress, in our view, but the company is well positioned for renewed growth once macro conditions stabilize.

WAARDERING

Economic Moat   Fair value   Stewardship Rating   Book
Narrow   EUR 20,00   Standard  
Moat Trend   Uncertainty   Sector  
Stable   Medium  

Cycl. consumptiegoederen
- uitgeverijen


BULLS

  • Wolters has had the most success serving professionals in highly specialized niches. It is arguably more difficult to develop for these specialties than it is for more general audiences, so it will be easier for Wolters to capture share from competitors, than vice versa.

  • Software is very scalable, so the mix shift toward software solutions will enable the firm to reduce expenses and expand margins.

  • Wolters serves numerous niches where few alternative offerings exist. As a result, pricing tends to be more rational among the major players.

 

BEARS

  • Wolters Kluwer has reported slower growth in the U.S. legal and tax markets than its peer, Thomson Reuters, which could signal a deteriorating competitive position.

  • Weak economic conditions in Europe and North America could accelerate the decline of print, and increase pricing competition for electronic products and services as institutional clients move to reduce their expense structure.

  • The decline of print could reduce Wolters Kluwer’s bargaining power with clients, which would limit the company’s ability to upsell its electronic product and service subscriptions.

 

 

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Effecten genoemd in dit artikel

Naam effectPrijsChange (%)Morningstar Rating
Wolters Kluwer NV63,94 EUR0,50

Over de auteur

Liang Feng  

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