Q: Was just re-reading the 2022 5i report on FSV and reviewing some recent answers to questions whereby you remain positive on the name. Can you provide a quick update on a few things in the report, like the key risks then versus now, and comment on the current valuation on a forward basis (and anything else new/changed, positive or negative that you think is worth considering before making the decision to buy now). Thanks.
5i Research Answer:
We don’t think the fundamentals of the business and its risk profile changed that much since then. For example, FSV depends on the health of the real estate market, and also the competitive landscape is quite intense with low barriers to entry, and relatively low switching costs, but FSV has still managed to have very high customer retention by catering well to customer needs. Lastly, FSV’s growth strategy is fueled through acquisitions, which could be at risk of impairment if FSV overpaid for deals.
FSV is trading at 32.5x Forward P/E, its current valuation is at a fair range compared to its 5-year averages ranging from 26x to 41x.