Dealogic (Holdings) Plc (LON:DL.) provides technology based products to the investment banking industry. These are mainly used for data analytics and therefore forming strategic decisions. Their products are used by the top 50 investment banks and it has over 25 years of industry experience. More on these products can be found at the company website: http://www.dealogic.com/. Their web site is a little thin on the details but I think their products have a stable demand and see it growing as the M&A market this year is buzzing. 

The following overview from Business week may be helpful in understanding their business and products and you can see some more background here.

The company offers coverage of capital markets and corporate finance activity allowing users to keep informed real time of all deal related activity as well as providing a transaction and event management platform, used in all stages of the capital raising process from origination through to marketing, bookbuilding, allocation and settlement. Dealogic Limited is based in London, United Kingdom. Dealogic Limited operates as a subsidiary of Dealogic (Holdings) plc.

I've pulled examples of the kind of data provided by Dealogic and used by investment banks

Similar services are also offered by Thompson Reuters but, as per my understanding, Dealogic commands more respect as their data is more real time and up to date.

Investment case

The historic and the present numbers paint a pleasant picture.

Financials [1]

Market Cap of £100 million. 52 week high and low – 217 p – 140p. The dividend yield is 4.4%.

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About the Author

Puneetk

Premium Member

I am a full time IT professional (financial services) and a part time private investor. Started investing in 2003  as a hobby inspired by reading "The Intelligent Investor".  I categorise myself as a long term value investor and am interested in stocks were value is supported by numbers not stories. Though I must admit to my share of mistakes (speculative buying) and hopefully I will keep on learning from those. more »

2 comments

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Tommc14
30th Nov '10

Hi

Thanks for the article, very interesting.

There is something I don't get about PE valuations soon after share buybacks. I feel I must be missing a simple point, but since I don't get it Im just gonna go right out and ask about it:

Surely, since there has now been a buyback, when valuing the company the previous EPS should be calculated based on the new, lower number of shares?

A simpler way of looking at this is to think of PE not as SP/EPS, but as Market Cap/Net Income (since the no of shares cancels, and this is the term that seems to be causing the confusion).

This would land Dealogic on an even more attractive PE of ~6.5, with a corresponding reduction in the PEG.

Further support for this is that the SP is essentially the same now as it was in early June when the buyback was announced. This means that the same SP x a lower number of shares means a lower Market Cap which, when divided by the unchanged Net Income in 2009, means a lower PE.

This seems like such a simple point, yet all the data websites I have checked list the PE at 9.9, based on the old number of shares (although they may all get this from the same source). Please tell me if there is something I missed!
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puneetk
5th Jan '11

Firstly thanks for your comments. Secondly, I was busy & have not been visitng the site regulary so couldn't reply to your comments earlier.

One way to see it (and is there in your comments) is the "Market Cap" which is the value Mr Market assigns to a business (due to its earnings, cash flows, assests, etc). So logically it doesn't matter if a business has an equity base of 1 share or 1000 shares. Like the total calorific value of a pizza remains same if you eat it with or without slicing it.

Companies try to create  shareholder values by deploying it cash resources in various ways:

- Grow inorganically (takeover) or organically (invest in R&D,  new plant etc) - which is risky but can pay

- Dividends or buybacks (safe option)

As per the latest RNS out on 31st Dec - "the total number of voting rights in the Company is 49,214,664". So the the projected EPS should be higher in my calculations.
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Income and Efficiency Numbers: Valuations:





Latest F'cast
Div Yield 4.40%
P/E 10.2 9.9
Div Cover 2.2
PEG 0.1 2.5
Op Mrgn 37.80%
Pr/Revenue 1.8 1.6
ROCE 63.50%
Pr/Book 1.7