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Total advertising revenue dropped by 43% in Q2 20 and ITV Studios was affected by the stop in production. The adjusted EBITA margin collapsed to 14% of revenue (-8pts yoy) despite the reduction in the cost of programmes by £77m and overheads cost savings of £51m over £60m targeted in 2020. There is no guidance for Q3 20 and FY2020. The negative trend in advertising was reduced in July 2020 (-23%). ITV Studios restarted production in June 2020.
Companies: ITV Plc
Tremor’s AGM statement shows that Tremor was delivering on its strategy and on course to achieve FY20 revenue of $425m in Q1. However, the impacts of COVID-19 on the advertising industry led to a challenging Q2 20, with Tremor’s revenue falling with the market to be c40% below Tremor’s FY20 plan. In response, management have moved quickly to reduce FY20 opex by over $23m vs budget, and positioned Tremor’s platform to respond to a rebound in demand. There are encouraging signs for H2 20, but visibility continues to be low and Tremor is not giving guidance for FY20. We consequently introduce revenue and EBITDA ranges for FY20 and FY21, and place our estimates at the mid-point for FY20. To then highlight that Tremor’s platform can rapidly rebound, we move our previous FY20 forecasts to FY21. This reflects that we believe that Tremor’s investment case remains compelling, and even on our lower case FY21 EBITDA of $35m, Tremor is trading on 5x EV/EBITDA vs ad tech and AIM peers on >10x.
Companies: Tremor International Ltd.
We have knitted together the impact on the investment companies from what is now widely considered to be the most severe pandemic in a century. The collapse in asset prices over the latter part of March, brought the curtain down on an up-market that lasted more than ten years. In amongst this, there were pockets, such as the technology sector, that held up well. For many industries, the worst is still to come, as we brace ourselves for the sharpest contraction to global growth since the US great depression.
Companies: ASL SDV ASIT BGEU BRLA CCPE DPA IEM JMF JZCP JUKG EPIC PSHD CSH RIII CCPG BLP TMPL BPCR SEQI AIF SMT CIFU SQNX FAIR ICON RSE CRS GWI USF DIGS
Interim results confirm several positives for GlobalData. It has reported significant organic growth in key metrics. This should continue given the increase in deferred revenue, much of which will contribute to H2. Integration of the recent acquisitions (MEED and RVL) appears to be going well, bringing new addressable markets to bear. Finally, cashflow dynamics are positive, supporting the ability to make further acquisitions in a sector with scope for consolidation. The Group's growth status is reflected in relatively high short-term ratios. However, on longer term cashflow analysis, theoretical values are all higher than the current level.
Companies: GlobalData Plc
De La Rue remains challenged. New management has to navigate a difficult Currency market and consequent concern over its finances. The swift response in terms of a turnaround programme is a positive start, accelerating cost cutting initiatives and cash management measures, including suspension of the dividend. Restoring stability and rebuilding confidence in the investment case is likely to take some time.
Companies: De La Rue Plc
Disney+ hits 22m mobile users, SoftBank backed firm downsizes IPO, German mobile carrier selects Huawei
Companies: ENET 7DIG MVR ZOO ZOO AMO BOOM MIRA MWE
Tremor has reported a strong set of FY19 results and announced a prudent $10m buyback. The results are in line with January’s trading update, and demonstrate strong growth in Digital Video and Connected TV (CTV) advertising. Tremor has also seen a solid start to FY20, but COVID-19 could markedly affect a number of its clients. The management and board highlight that it is too early to fully assess the impact of COVID-19 on Tremor’s FY20 outlook, and we consequently leave our FY20 estimates broadly unchanged at this point. In this report we also explain Tremor’s investment case in depth, and highlight that Tremor is excellently positioned to capitalise on the major growth in Video and CTV advertising, and can see further upside from M&A and the resolution of the Uber case.
In Q1 20, organic net revenue decreased by 3.3%, o/w -7.9% in March 2020 due to the containments imposed in a large number of countries in Europe and the US. In this extremely difficult environment, WPP signed new businesses for a total of $1.0bn (Intel global account, Hasbro and Novo Nordisk media accounts for instance). WPP confirmed cost savings of £700-800m in 2020 and added additional measures such as part-time working and voluntary salary sacrifice for some categories of employees.
Companies: WPP Plc
In Q1 20, total advertising’s revenue (+2%) was in line with expectations and ITV Studios’ revenue (-10% organically) was impacted by the stopping of production since mid-March 2020. Advertising deteriorated in April 2020 (-42%) due to the lockdown and the cancellation of advertising campaigns. This may be a bottom considering the resumption of economic activity by the end of H1 20. ITV confirms cost savings, the reduction of capex and the cost of programmes.
CAP-XX Ltd* (CPX.L, 3.1p/£10.1m) | Gfinity plc* (GFIN.L, 1.675p/£12.0m) | MTI Wireless Edge Ltd* (MWE.L, 38.5p/£33.8m) | Newmark Security plc* (NWT.L, 1.05p/£4.9m) | Mirada plc* (MIRA.L, 95.0p/£8.5m)
Companies: CPX GFIN MWE NWT MIRA
Centaur has provided an update offering further insight into trading post-lockdown. Encouraging performance has been noted across digitally focused segments, with MiniMBA (e-learning) seeing strong demand and contract wins in Econsultancy and XEIM labs supporting clients with digital transformation projects. The Lawyer subscription renewal rate, supported by premium content, also remains healthy. As previously flagged however, Telesales has seen a sharp drop in sales as a function of disruption to customer businesses; c50% of MarketMaker staff have been furloughed to minimise impact to profits. H2 events are also at risk, although the Group is considering online formats early in order to reduce irrecoverable costs and maximise delegate and sponsorship revenues. Focus on near-term cash preservation has led to the prudent decision not to pay the final FY’19 dividend, saving £0.7m of cash. The Group held cash of £6.7m at April 3rd, with potential access to undrawn banking facilities of £25m subject to positive discussions currently being held to amend covenants should short-term liquidity be required. The range of outcomes remains wide, and we have no forecasts published at this time, however at 0.6x EV/ FY’19 sales the Group looks to be priced as a distressed asset. Given balance sheet strength, a building recurring revenue model and improving high-margin revenue mix, this valuation looks incongruous with fundamentals in all but the most extreme downside scenarios.
Companies: Centaur Media Plc
CentralNic's CMD gave us new positive insights into the company's investment case. CentralNic's organic growth is stronger than we thought, the Direct division generates high ROI, the monetisation market was shown to be critical to the domain name market, Team Internet's market leadership was further reinforced and acquisition opportunities were shown to be larger than anticipated. These investment views are not reflected in CentralNic's low valuation multiples, in our view.
Companies: CentralNic Group Plc
CentralNic’s capital markets day (CMD) on 24 June 2020 introduced the divisional management team and provided insight on each of the three key segments as they will report in FY20: Indirect (Wholesale, Registry); Monetisation (Team Internet); and Direct (Retail, Corporate). We have picked out what we believe are the four key themes from the CMD: FY20 performance, COVID-19 and seasonality; organic growth; M&A; and, pulling it all together, the benefit of scale. CentralNic continues to trade on an FY20 EV/EBITDA of 9.1x and a P/E of 15.8x, a material discount to its peer group, with our DCF indicating further share price upside. M&A could bring CentralNic’s multiples down further.
Kape’s H1 20E trading update continues the run of positive news from the Group with confirmation of strong trading through the whole of the first half. There is no change to guidance for revenue and Adjusted EBITDA for the current financial year which management outlined at the time of the transformational acquisition of PIA last December. Likewise, the integration of PIA is set to yield the anticipated synergies. The recent Capital Markets Day (CMD) emphasised the excellent progress made in broadening Kape’s offer to consumers. We leave our estimates unchanged while noting the positive momentum in the business.
Companies: Kape Technologies Plc
Centaur Media has delivered a resilient H1 in which adj EBITDA remained positive at £1.0m (H1’19: £1.2m). Group sales decline of 27% to £17.7m was substantially offset by tight cost control and a shift in mix towards higher quality revenue streams. The Lawyer revenue renewal rate remained strong (106%) and supported Group premium content sales (-3% y/y to £6.9m), with Mini MBA sales (+101% y/y) performing well. Telemarketing sales (-36% y/y) and events (-82% y/y) were unsurprisingly impacted by lockdown restrictions, with MarketMakers now being restructured to focus Group resources on more profitable areas. The outlook remains uncertain, and we are not reintroducing forecasts at this time, however in an undemanding medium-term scenario, we see £5m FCF as achievable which would generate a FCF yield of 19% at current valuation. Net cash of £8.4m was held at 30 June, while an undrawn £1.7m overdraft and £10m facility with covenants waived until Sept 2021 provide additional balance sheet strength.