IRESS Fairly Valued Following Market Rebound

We have cut out fair value estimate for narrow-moat-rated Iress by 5% to AUD 11.00 per share following a review of our financial model. But at the current market price of AUD 10.80, the shares are fairly valued. We have adjusted our earnings forecasts to more clearly reflect the introduction of the AASB 16 accounting standard for operating leases, which effectively reclassifies rental expense as depreciation and interest expenses. This has several impacts on company financial statements, and increases EBITDA, EBIT, and their associate margins. Our revised forecast approach enables a like-for-like comparison between historical and future forecasts.