Shaw and Partners IPD Group Ltd (IPG)

Rating: Buy | Risk: High | Price Target: $3.53. Charging Ahead

Event: IPD Group held its inaugural AGM as a listed company yesterday, with three key developments: 1) 1H23 earnings guidance indicated the company is (once again) running well ahead of Shaw’s forecasts; 2) 2H23 commentary indicates rising investment in long-term growth initiatives; and 3) Long-time executive, board member, and substantial shareholder Mohamed Yoosuff is transitioning from CFO to Director of Strategic Development. After upgrading Shaw’s earnings estimates and revisiting Shaw’s valuation approach, Shaw’s price target has increased from $2.52 to $3.53 (19% TSR), and Shaw’s reiterate their Buy rating.

Recommendation: IPD is a high-quality business with strong growth prospects, ample cash generation, and a rock-solid balance sheet. Management’s track record includes ongoing operating improvements, consistent dividend payments, and multiple guidance upgrades post-listing. Shaw’s conservative (upgraded) forecasts the valuation remains attractive, with IPD trading on 17.8x FY23 PE (22% premium to peers’ 14.6x) and 9.2x FY23 EV/EBITDA (3% premium to peers’ 9.0x). Shaw’s believe a premium to peers is appropriate and Shaw’s also note the clear potential for accretive and/or strategic acquisitions. After upgrading Shaw’s earnings forecasts and updating Shaw’s valuation approach, Shaw’s target price rises from $2.52 to $3.53, and Shaw’s reiterate their Buy recommendation.