Case Studies
S&P Global
S&P Global inc formerly McGraw-Hill is a Global leader in providing information and analysis over a century. It was formed in 1909 when two publishers, James McGraw and John Hill merged their publishing company in 1909. They have acquired leading brands like Standard & Poor, Platt, J.D Power and Capital IQ. S&P Global has 280 offices in 40 countries. It was listed in 1978.
Global leader in providing information and analysis for over a century
Formed when two publisher James McGraw and John Hill merged their publishing company in 1909
Leading brand acquired over time- Standard & Poor (1966), Platt, J.D.Power, Capital IQ
More than 280 offices in 40 countries
The spin-off education business (happened after the share acquisition) providing greater ROI
Standard & Poor is the world’s foremost provider of credit rating
S&P contributes to half of the company’s earning and uses only 12% of assets. ROIC for this business is over 100%
Has Oligopoly position in its market
Standard & Poor- 150 year old brand(also owns CRISIL in India)
Platt- Leading energy and commodity information provider
J.D.Power- Global marketing information services company
S&P indices- world’s leading index provider
CAPITAL IQ- comprehensive research provider / Capital IQ provides research and analysis to 3,400 firms worldwide
Aviation Week- largest multimedia information and services provider for defence industry
McGraw-Hill Education : 100 year old brand
1$ trillion assets directly indexed to S&P
Capital IQ provides research and analysis to 3,400 firms worldwide
Platt is present in over 150 countries while J D Power in 60
McGraw hill present in over 40 countries and publishing in 65 languages
S&P non-transactional revenue which includes rating fees and annual fees is 65% of its revenue and Subscription revenue of Captial IQ is 75%of its total
Credit rating highly regulated and only 2 established global leaders- S&P and Moodys creating a very high barrier to entry for any new entrant
Business based on reputation, reliability and product range
A very high quality business which is hidden within the parent company leads to the company having average ROCE of over 65% with a very strong balance sheet and excess FCF
At a P/E multiple of of 10x, it looks like an excellent bargain
Mettler Toledo
Mettler-Toledo is a multinational manufacturer of scales and analytical instruments. It is the largest provider of weighing instruments for use in laboratory, industrial, and food retailing applications
A global supplier of precision instruments for use in laboratory, industrial and food retailing applications.
Strong worldwide leadership positions in the majority of instruments.
One of the largest global sales and service organisations among precision instrument companies.
"The Mettler Balance" - single-pan balance was invented by Dr. Erhard Mettler in 1945.
In 1973, the company introduced the first-ever fully electronic precision balance
1989, METTLER acquired TOLEDO Scale Corporation, the largest US manufacturer of industrial and retail scales - Henry Theobald, had launched automatic weight and price display in 1901
METTLER TOLEDO is geographically diversified, with sales in 2008 derived 43% from Europe, 35% from the Americas and 22% from Asia and other countries
Pioneer in the field of automated chemistry, setting the industry trend in the last 60 years – from inventing the single pan balance to electronic balance.
Most respected brand-customers opting for it for their most their most critical needs.
Global market leader with the three instrument groups most frequently used in the laboratory-balances, pipettes, and pH meters.
Required for critical processes of the customer but at the same time represent a small percentage of customer total cost , reliability ,precision and brand becomes even more significant.
Geographic, product range, industry and customer.
No single customer accounted for more than 1% of net sales
regional distribution : USA-27%, Swiss-18%, Western Europe- 30%, China- 13% and other emerging markets- 13%.
The emerging markets currently contribute 27% of the net sales. present in China for over 20 years and recent costs saving initiatives include shifting production to China
Earning grown of 14 % cagr, while averaging ROCE of over 60%.
Gross margin of over 80% in the last 5 years and managabe debt
P/E of 10x, attractive price for an industrial leader
Large exposure to Europe
Largest installed base of weighing instruments in the world-20% of total in last 10 year
Key to customer retention as well as expansion in emerging markets.
service business not only high margin but fairly predictable and consistent revenue generator.