London Call: Are LSE's Shares Undervalued?
Shares in London Stock Exchange PLC have nearly doubled since the start of the year, thanks largely to Nasdaq Stock Market Inc.'s proposal last week to acquire the centuries-old market for $4.2 billion.
But by one measure, at least, LSE's suddenly lofty shares don't seem expensive -- Nasdaq's own stock, which trades at a far higher valuation. That raises the question of whether LSE is undervalued, as many of its shareholders and the exchange itself have argued since LSE management has rejected a series of approaches, or if Nasdaq is overvalued.
The answers will have a bearing on how the trans-Atlantic chess game plays out between financial exchanges that have stepped up talks to merge with each other. In a research note published earlier this week, investment-bank boutique Sandler O'Neill found that major U.S. exchanges sported valuations about 75% higher on average than European counterparts.
But many investors say these valuation discrepancies are likely to change, especially with global deals in the works. European exchanges have a lot of advantages that are being overlooked, they say. These include lucrative clearing businesses and growing listings businesses for companies that want to sell their shares outside the U.S., where they aren't subjected to tough U.S. Sarbanes-Oxley financial-reporting rules.
"The world is just waking up to European exchanges," said Rick Wetmore, financial-services analyst at Turner Investment Partners, a Berwyn, Pa., money-management firm with assets of $20 billion and which owns shares of exchanges including Nasdaq and Frankfurt's Deutsche B?rse AG. He predicts European exchanges' price-earnings multiples will rise as U.S. investors look into their businesses and U.S. exchanges look to merge with or acquire European bourses.
Nasdaq's bid for LSE may be just the opening gambit. Many expect New York Stock Exchange owner NYSE Group Inc. to submit a bid soon for LSE, potentially driving the price higher. Deutsche B?rse and Euronext NV of Amsterdam -- both of which run stock and derivatives exchanges -- have expressed an interest in merging as well.
Mr. Wetmore, whose firm owns about 3% of Nasdaq's shares, said he expects the New York-based company to sweeten its proposal, especially since LSE shares traded yesterday at ￡11.85 ($20.69) each, about 25% above Nasdaq's proposed price last week of ￡9.50. This week, Nasdaq Chief Executive Bob Greifeld is expected to visit the LSE's largest shareholders to talk to them about cost savings and other benefits of the deal.
Investors on both sides of the Atlantic are bidding up shares of exchanges in anticipation of mergers because, increasingly, electronic markets can squeeze costs out of the trading process if they can move customers from two electronic-trade platforms to one.
Before the March 10 announcement by Nasdaq, the venerable United Kingdom exchange traded at ￡8.80 a share, a price that was about 16.9 times the consensus estimate of what it would earn during calendar year 2007. Nasdaq's stock, meanwhile, closed at $39.50 a share the day before the LSE news broke, a price that was about 26 times its expected 2007 earnings. In 4 p.m. trading yesterday in New York, Nasdaq shares were up 3.5%, or $1.51, at $44.77 each.
Since the offer, LSE's share-price rise has increased the multiple at which it trades to projected earnings, to 22.3. That has closed the gap somewhat with Nasdaq, but the No. 2 U.S. exchange behind the NYSE still trades at a higher multiple of about 29.3.
In some ways, Nasdaq's higher multiple isn't surprising. The U.S. stock market is much larger and offers growth opportunities, in part because many U.S. exchanges haven't been public as long and have room to expand their profit margins as electronic trading expands.
The European exchanges are in a "more mature phase," says Richard Repetto, an analyst at Sandler O'Neill. The firm does business with Nasdaq and also owns shares of the company.
There also is a geographical quirk at play. For all the talk of globalization, many investors are still very local in their outlook. In LSE's case, many top holders aren't from the U.S. or continental Europe, but are from the U.K. and measure the company's shares against the country's FTSE 100. That index, like most in Europe, typically trades at a cheaper price-earnings multiple than U.S. stock benchmarks like the Standard & Poor's 500-stock index.
As a result, European exchanges historically have traded at about 14 to 15 times forecast earnings, while U.S. exchange groups have tended to trade at multiples above 20 times expected earnings. Globally, exchanges currently trade at about 23 times forecast 2007 earnings, according to Andrew Mitchell, an analyst with Fox-Pitt, Kelton in London.
LSE Chief Executive Clara Furse has long argued that her company deserves a higher multiple. As a result of the 35% leap in its price since last Friday, LSE stock is trading in line with its peers around the world. If LSE were to trade at a multiple similar to that of Nasdaq, though, its shares could fetch about ￡14.50.
The problem with that thinking, though, is that excitement over the prospects of global stock-exchange consolidation could be inflating shares across the board. "Valuations are too high," says Sandler's Mr. Repetto, who has a "buy" rating on Nasdaq shares but more cautious ratings on other exchanges. Prices "appear to be somewhat inflated… incorporating a lot of the positives" in the business that investors are anticipating.
If, for example, Nasdaq paid ￡15 an LSE share, the acquisition would probably generate a return on investment of only about 4%, Fox-Pitt's Mr. Mitchell estimates. That would likely be below Nasdaq's borrowing cost. At a price closer to ￡12, Nasdaq could expect a return on investment closer to 6%, making a deal more palatable, he says. Richard Herr, an analyst with Keefe, Bruyette & Woods recently wrote that Nasdaq had a 40% to 50% chance of convincing LSE to approve a deal, but he added that regulatory approval "may be very difficult."
伦敦证交所的估价或许仍然偏低
今年年初以来，伦敦证交所(London Stock Exchange PLC, 简称LSE)的股价已经飙升了近一倍，这主要应归功于那斯达克(Nasdaq Stock Market Inc.)上周提议出价42亿美元收购这家有著数百年历史的交易所。
但至少从那斯达克股票的估价这个角度来看，LSE扶摇直上的股价并不算贵，因为那斯达克的估价比LSE要高出不少。由就此引发了一个问题：LSE的股价是否被低估了（LSE的许多股东和管理层都是这样认为的，LSE管理层拒绝了一系列收购方案便是明证），还是那斯达克的股价被高估了？
问题的答案如何将对这笔事关LSE和那斯达克命运的交易产生影响，此时，两大交易所正在紧锣密鼓地进行著并购谈判。在本周早些时候发布的研究报告中，投资银行Sandler O'Neill认为，美国大型交易所的估价平均比欧洲大型证交所高出75%左右。
但许多投资者认为，估价方面的差异可能发生改变，特别是在发生全球性并购交易的情况下。他们认为，欧洲证交所的许多优势都没有得到正视。例如，大有赚头的清算业务和发行业务随著越来越多的企业来到欧洲上市而不断壮大，这些企业之所以选择来欧洲而不是美国的证交所上市是因为在美国上市要受到《萨班斯－奥克斯利法案》(Sarbanes-Oxley)的严格监管。
资产管理公司Turner Investment Partners的金融服务分析师瑞克?维特摩(Rick Wetmore)表示，全球的投资者刚刚发现了欧洲证交所这个“新大陆”。他预言，欧洲证交所的本益比将随著美国投资者分析其业务和美国证交所的收购举动而上升。Turner Investment Partners管理著200亿美元的资产，拥有那斯达克、德国证券及衍生工具交易所(Deutsche Boerse AG, DB1.XE, 简称：德国证交所)等多家证交所的股票。
那斯达克上周对LSE发出收购要约或许只是刚刚拉开了一场竞购战的帷幕而已。许多人认为，纽约证交所也将在近期内发出竞购报价，从而抬高LSE的身价。此外，德国证交所和Euronext NV of Amsterdam也有意与LSE合并。
维特摩表示，那斯达克将提高出价，原因是LSE周三的股价已经升至11.85英镑（合20.69美元），比那斯达克上周9.50英镑的报价高出了25%。预计那斯达克首席执行长鲍勃?格雷菲尔德(Bob Greifeld)本周将造访LSE的第一大股东，与他们讨论这笔交易所能带来的成本节省及其他协同效应。
与此同时，大西洋两岸的投资者正在积极地推高交易所的股票，他们认为证交所之间将出现更多的并购交易，他们的理由是如果能把两个电子交易平台合二为一，可以产生更大的成本节省效应。
在那斯达克于3月10日宣布有意收购LSE前，LSE的股价报8.80英镑，是2007日历年度普遍收益预期的16.9倍。而那斯达克在宣布收购LSE前一天收于39.50美元，是2007日历年度收益普遍预期的26倍。那斯达克的股价周三收盘涨1.51美元，至44.77美元，涨幅3.5%。
自从那斯达克发出收购要约以来，LSE基于预期收益的本益比升至22.3倍，从而缩小了与那斯达克的差距，但还是远远不及纽约证交所29.3倍的预期本益比。
从某些方面来讲，那斯达克的本益比高于LSE并不令人感到奇怪。因为那斯达克的规模更大，而且提供了更多的成长机遇，这在一定程度上是因为许多美国证交所上市的时间不长，而且，随著电子交易的推广，它们在提升利润率方面的前景更广阔。
Sandler O'Neill的分析师理查德?利贝托(Richard Repetto)表示，欧洲证交所已经进入了比较成熟的阶段。Sandler O'Neill与那斯达克有业务往来，而且也持有那斯达克的股票。
此外，还有地理方面的因素。尽管现在人们都在大谈全球一体化，但仍然有许多投资者用十分狭隘的目光来看待全球化。就LSE而言，许多大股东都来自英国，而不是来自美国或欧洲大陆，而且这些大股东都是用富时100指数来衡量LSE的价值的。富时100指数与欧洲大部分证交所采用的指数一样，其本益比一般要低于标准普尔500指数等美国证交所采用的基准指数。
因此，欧洲证交所股票的本益比一般在14-15倍左右，而美国证交所股票的本益比往往要超过20倍。Fox-Pitt, Kelton驻伦敦的分析师安德鲁?米切尔(Andrew Mitchell)表示，基于2007年的预期收益，全球证交所目前的本益比约为23倍。
LSE的首席执行长克拉拉?福尔斯(Clara Furse)一直认为，LSE的价值被低估了。随著股价自上周五上涨了35%之后，LSE的本益比基本上与全球平均水平持平了。如果本益比与那斯达克相同，那么就意味著LSE的股价将升至14.50英镑。
投资者认为全球证交所将迎来整合高潮的想法可能会带动全球证交所的股票全线攀升。Repetto表示，这些证交所股票的估价太高了。各证交所的估价似乎被夸大了，已经消化了大量投资者所期待的利好因素。
米切尔估计说，例如，如果那斯达克出价每股15英镑收购LSE的股票，那么这笔交易的投资回报率仅有4%左右，这个投资回报率甚至可能不及那斯达克的融资成本。如果出价接近每股12英镑，那么投资回报率将接近6%，这还比较令人满意。Keefe, Bruyette & Woods的分析师理查德?赫尔(Richard Herr)表示，那斯达克有40%-50%的机会说服LSE接受其报价，但通过监管部门审批的可能性恐怕很渺茫。
