Ira Sohn London: Nicolai Tangen, founder and CEO AKO Capital

Ira Sohn Conference notes Nicolai Tangen

Trade Idea: Experian plc (LON:EXPN) (OTCMKTS:EXPGY)

Price Target: Trading below valuation of peers’ high cash generation and plenty of room for growth

Valuation: Experian 6% FCF yield 2013 P/E of 21.6, below peers at 24+ – cheap based on growth expected during the next few years.


Nicolai Tangen on market position

Strong market position, margins and free cash flow. Largest and only global credit bureau, credit analytics. 5-10% organic top line growth expected. 700 bps margin growth during last six years. Free cash flow conversion ratio of 100% since listing. Company is miss understood as there are fee comparable. Selling credit data into many segments as credit checking becomes more prominent. Geographic compared to only two U.S. focused competitors. Revenue growing much faster than peers. Plenty of geographies to expand into, developing markets are still rapidly growing. After 2008 credit checks have become stricter. Higher margins. 30-50 new products under development; believes that these products alone will add £1 billion to revenue. Investing in growth by 200 – 300 bps per years. Margins expected to expand 20-30 bps over next few years. Cash conversion running at over 100% for several of the past few years. Generate $3 billion over next three years in free cash. Gearing is plummeting. Global expansion and global integration is rapid and efficient. Databases are hard to replicate, as one of the only global companies, plenty of possibility for data leverage.


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