1. Yujiang Chen (Walter) Zeyu Chi Yin-Jen Kao Ming Li Yuqing Zhang
Presented

2. Agenda Current Holdings Review Company and Its Business
Macroeconomics Overview
Industry Overview
Financial Analysis
Comparable Analysis
Projection and Valuation
Recommendation

3. Current Holdings Purchased: 200 shares @ $36 on Nov 11,1999
Cost basis: $7,200
(We experienced two different 2 for 1 splits, resulting in the ownership of 800 shares at an adjusted cost basis of $9/share)
Sold: 400 $22.53 on January, 2007
Realized Gain on Sale: $5,412 ( %)
Sold: 200 $56.75 on November, 2013
Realized Gain on Sale: $9,550
Current market value: $78.50*200 (11/9)
Vs. our $9/share cost basis = Gain: $13,900 ( %)
If consider the inflation, the gain% is %. 912.85

4. Company Introduction
Established since 1979, headquartered in Monett, Missouri
Listed on NASDAQ on October 29, 1985
Industry: Business Software & Services
Provides technology solutions and payment processing services for financial services organizations
Serves nearly 10,900 financial institutions through three brands:
Source: Annual Report (Pg.7-8)

5. Jack Henry Banking® Business Segments
Provides electronic payment business and accounting ledger services to commercial banks
Clients include nearly 1,200 banks
More than 6,500 commercial banks and savings institutions in this asset range
Jack Henry Banking®
Source: 10-K (Pg.5)

6. Symitar® Business Segments
Provides electronic payment business and accounting ledger services to Credit Unions
Serves credit unions of all sizes, with almost 800 credit union customers
Over 6,500 domestic credit unions in industry
Symitar®
Source: 10-K (Pg.5)

7. ProfitStars® Business Segments
Provides specialized products and services to FI customers
Serves financial services organizations of all asset sizes and charters, with approximately 10,500 domestic and international customers
ProfitStars®
Information Security & Risk Management
Business Intelligence & Financial Performance
Training & Consulting
Source: 10-K (Pg.5)

8. Business Overview Revenue: Support and service revenue (95%)
Hardware revenue (5%)
License revenue (<1%)
Key Strategies
Provide banks and CU with core software systems
Expand each core customer relationship
Capitalize on diversification acquisitions
Key Risks Involved
Information Security
Operational Risk
Restatement of financial statement
Source: 10-K (Pg. 6-7, 12-16, 21)

9. Estimate of Support and Service Revenue
Year Ended June 30
Change
2015
2014
Support and service
$1,200,652.00
$1,112,331.00 8%
Percentage of total revenue
96%
95%
Estimate support and service revenue breakdown using changes
Year over Year
$ Change
% Change
2014E
2015E
In-House Support & Other Services $
3,603 1%
327,913
331,516
Electronic Payment Services
38,321 9%
425,789
464,110
Outsourcing Services
35,490
15%
236,600
272,090
Implementation Services
8,704
13%
66,954
75,658
Bundled Products & Services
2,203 4%
55,075
57,278
Total Increase
88,321
1,112,331
1,200,652
We use $change divided by % change provided in 10-K to get 2014 revenue breakdowns and estimate 2015 revenue.

10. Company or Product Name Acquisition Payment (in Thousands)
Acquisition Strategy
Complement internal growth, diversification, and expand product offerings
29 acquisitions since the end of fiscal 1999
Increasingly difficult to find proven products/services to optimize the clients’ operational issues.
Fiscal Year
Company or Product Name
Products and Services
Acquisition Payment (in Thousands)
2015
Portfolio management systems and factoring software
10,000
2014
Mobile banking, web development and data-enriched marketing technology
27,910
2010
Internet and telephone bill payment services
301,143
Payment processing solutions for credit unions
61,841
Integrated technology and payment processing solutions
67,617
Source: 10-K (Pg. 7)

11. SWOT Analysis Strengths Weaknesses Opportunities Threats
Integrated product lines
Strong business relationship
Weaknesses
Internal control over financial reporting
Relative Small size to rivals
Opportunities
Acquisition strategy
Outsourcing
Threats
Banks internalized the IT systems
Uncertainty in Banking industry
SWOT Analysis

12. Banking and credit union industry is expected to grow.
Macroeconomic Overview
Banking and credit union industry is expected to grow.
Assets (loans) of credit union
Assets of all commercial banks
Source: Federal Reserve Bank of St. Louis

13. Macroeconomic Overview
Total number of credit unions and commercial banks keeps decreasing. The number of credit unions has decreased by 30% since 2006, and the number of commercial banks has decreased by 26% since 2006.
Number of credit union
Number of all commercial banks
Source: Credit Union National Association
Federal Reserve Bank of St. Louis

14. JKHY Mainly serve commercial banking and credit union industry
Industry at a Glance
JKHY Mainly serve commercial banking and credit union industry
Commercial banking revenue
Credit union revenue
Source: www. IBIS World.com

15. Porter’s Five Forces Entry of new competitors: Threat of substitutes:
Medium
No formal prohibitions
Difficult for new companies to gain customers
Economies of scale
Threat of substitutes:
Low
Long term contracts
High switching cost
Rivalry determinants:
High
Highly competitive and consolidation market
Various larger competitors with more resources and advanced technology.
Determinants of buyer power:
Low
Reluctant to change
More banks show preference for outsourced delivery
Determinants of Supplier Power:
Low
Hardware and software markets is fairly competitive

16. Major Competitors Overview
1.Fidelity National Information Service, Inc.
Provides banking and payments technology, consulting, and outsourcing service worldwide
Electronic funds transfer services
Core processing software applications to run banking processes
Payment service such as outsourced card-issuer services and customer support
2. Total System Services, Inc.
Provides electronic payment processing services to banks and other financial institutions in the United States, Europe, Canada, Mexico, and internationally.
Account processing
Processing services, related systems, and integrated support services

17. Major Competitors Overview (cont.)
3. Global Payments Inc.
Provides payment for credit cards, debit cards, electronic payments, and check-related services, operates in both North America and International market.
Authorization processing
Settlement and funding processing
Customer support
Payment card industry security
4. DST Systems Inc.
Technology-based information processing and servicing in the United States, United Kingdom, Canada, Australia, and internationally.
Customers information processing service
Maintaining investor identification and ownership records

18. Stock Market Prospects and Comparison
JKHY generate superior return over its competitors over the past ten years.
Source: Yahoo Finance
11/9/ /9/2015

19. Technical Analysis
Source: Yahoo Finance

20. Ratio Analysis
Source: 10-K

21. Comparable Analysis
Source: capital IQ, Yahoo Finance

22. Income Statement Projection
License accounts for less than
1% of total revenue. Based on
10K, license revenue fluctuates year over year, so we assign a growth rate of zero to smooth out. Also, because of the accounting error, we added back unrealized revenue from restatement of annual report for the next five years.
Growth rate based on the asset growth rate of commercial banking and credit union industry
Based on 10K, management team forecasts a strong growth trend in outsourcing service.

23. WACC & FCF Valuation WACC Calculation CAPM based Cost of Equity 7.76%
Return to shareholders over the past 5 years
25.17%
Cost of Equity
11.24%
Cost of Debt
3.18%
Current Stock Price
78.77
Shares Outstanding (thousands)
79,929.13
Debt (thousands)
52,700.00
Equity (thousands)
6,296,017.41
Equity Weight
99.17%
Debt Weight
0.83%
Tax Rate
35.00%
WACC
11.16%
Business Risk Premium
0.50%
Discount Rate
11.66%
Perpetual Growth Rate
3.00%
CAPM Calculation
Beta
0.74
Risk-Free
2.20%
Market Premium
7.50%
Cost of Equity
7.76%

24. WACC & FCF Valuation

25. Hold Recommendation Current Stock Price:$78.50
The price calculated from DCF valuation and Comparable valuation is 7.75% less than current stock price, which is within the 10% fluctuation range
DCF Valuation:$72.52
Comparable Analysis:$72.85
Current Stock Price:$78.50
Hold
More efficient cost management
Utilizing conservative cash flow forecast