Veda Group Ltd (ASX: VED) listed on the Australian Stock Exchange in December 2013 and since listing the company's share price has increased by 32%.
Veda Group is a data analytics company and leading provider of credit information and analysis in Australia and New Zealand. The company has in excess of 12,000 business customers that use Veda to assess credit risk, verify identify and check employee information and reduce identify theft and fraud. The company also has over 400,000 consumers who use Veda products, including identity and credit products such as VedaScore, CarHistory.com.au and TenancyCheck.com.au.
The company is in a dominant market position as a result of its large data pool and long-term customer relationships which include many large financial institutions which provide Veda with a strong competitive advantage. The company's strong network enables integration of data from multiple sources to provide useful insights to business decision-makers.
Veda's investment in establishing a strong and loyal customer base has been formed over a long period of time and is costly for potential competitors to replicate. Customers are reluctant to switch due to the high costs involved in changing from Veda to an alternative provider.
The demand for credit growth in Australia is a key earnings driver for the company. With consumer credit for the March quarter the strongest since the global financial crises and with low interest rates, Veda Group should benefit in the short to medium term. Look for ASX-listed debt collection companies, Credit Corp Group Limited (ASX: CCP) and Collection House Limited (ASX: CLH) to also benefit from the surge in consumer credit growth.
The company has a strong history of revenue and earnings growth with pro-forma earnings growing at a compound annual rate of 14.5 % between FY11 and FY13. Impressively, the company has grown revenue every year since 1993 from $18 million to $269 million today. The company has re-affirmed its FY14 earnings target of $102 million, up from $82 million in FY13.
The company is set to grow going forward from its new wealth management segment with its lost super product.
Foolish takeaway
I believe Veda Group looks attractive to purchase for the long-term. The company has a long history of increasing revenue and earnings. The company can leverage its dominant market position to grow into new markets and offer complementary services. Veda's s data is integral to decision makers. While the stock does appear a little expensive at its current price of $2.32 following a strong run since listing, it would be a worthy addition to a growth portfolio.
