ASX Special Dividend Likely Following Sale of IRESS Stake

We expect wide-moat-rated ASX to use the AUD 385 million raised from the sale of its 18.6% stake in IRESS to pay a fully franked special dividend. This may enable franking credits to be distributed ahead of a potential change in legislation, should the Labor Party win the next federal election, which is likely to be held in May. However, the company has yet to clarify the intended use of the funds. Considering the strength of ASX’s balance sheet and cash flow generation, we don’t think the company either needs the funds nor do we expect the funds to be used for merger and acquisition activity. We make no change to our AUD 52 fair value estimate and continue to believe the shares are overvalued.