As expected, Informa’s H1 20 were badly hurt by the pandemic’s impact on physical events, although consolidated revenues (-£593m to £814m) and adjusted OP (-73%; £118.6m) were above street estimates. Non-cash impairments/exceptional costs also hurt, leading to a statutory pre-tax loss. The COVID-19 Action Plan is being pursued and the postponement plan is now due to last until mid/late Spring 2021. Costs savings raised to > £600m savings by year-end (versus £500m).
Further cuts expected to our earnings and target price.
Companies: Informa Plc
Providing a trading update coinciding with its AGM, Informa reiterated that the outlook on physical events currently remains globally “unpredictable” despite signs of a return to business in Mainland China. Gradual recovery likely, as expected. Talks with US debt holders are ongoing and expected cost savings are raised from £130m to “at least” £400m. No changes to our forecasts at this stage.
Issuing a Q1 20 trading statement, Informa announced that it would temporarily suspend dividends while accelerating cost savings due to COVID-19. It also announced its intention to place a maximum of 250,318k ordinary shares (i.e. c.19.99% of the current share capital) via bookbuilding to be launched today. Note that 125,159k shares (9.99% of the capital) will be issued under the company’s existing share capital authority and 125,159k will be issued conditional to shareholders’ approval (meeting due on 4 May 2020).
Informa reported very sound FY9 results, with revenues up +3.5% organically, a very solid 32.3% margin, adjusted EPS was 51.3p (+4.3%) and the final dividend is raised by 7.4% (total dividend: +7.3%).
Conversely, and unsurprisingly, there is no guidance for FY20e due to the impact of the coronavirus on the events business. At this stage, a Postponement Programme has been put in place, shifting the events calendar to later dates in 2020… Our model is under review to adjust our forecasts.
Informa issued a reassuring trading update for the 10 months to end-October and said it was on track to deliver its FY19e targets, with a good forward pace for the important last two months of the year.
Informa reported solid H1 19 results, with a +3.4% organic revenue growth and a +8.2% organic growth in adjusted operating profit. The company said it was on track to deliver its FY19e targets, with a good level of visibility and raised its interim dividend by 7% to 7.55p (we had expected 7.50p). Our model is under review and our positive guidance is expected to be reiterated.
Informa’s FY 18 results were in line with expectations, including UBM since 16 June. Management had a confident tone for FY19e as it has good forward visibility on revenues (>50% of Exhibitor and around 2/3rds of subscription revenues already booked). The target is to keep a >30% operating margin (supported by cost savings) from a revenue base of c.£3bn, while generating solid operating FCF enabling it to increase the dividend progressively from now on.
Our Buy recommendation is reiterated.
Informa reported a trading statement for the 10-months ending October 2018
The group’s underlying revenue grew 3.9% in the first ten months.
The combination phase of “accelerated integration plan” for UBM is completed.
Revenue growth is on track for the full-year target (+3.5%).
Informa reported solid H1 18 results – including UBM from 15 June, with +4.3% revenue growth and +1.9% growth in adjusted operating profit. The operating margin was therefore a tick lower than last year’s restated accounts at 30.8% (versus 31.1%). The company is confident of the UBM integration and confirmed its target of 3.5% underlying revenue growth in 2018 and said it is on track to deliver savings targets of £50m in 2019.
Informa’s FY 17 results were in line with expectations, with revenues at £1,757.6m (up 30.7%, reflecting Penton’s integration and +3.4% organically) and adjusted OP at £545.5m (+31.3% and +2.3% underlying; margin of 31% compared with 30.9% in FY 17, slightly under our own 31.1% forecast).
Adjusted EPS rose by 9.5% to 46.1p (AV was 47.3p), i.e. in line with the recent guidance for “above 45.5p”, and the proposed final dividend is raised by 5.8% to 13.8p, i.e. the recent guidance for a full-year dividend at 20.45p versus 19.3p for FY16 (+6% yoy).
The FY18e outlook is for “at least 3.5% underlying growth” (with another strong year anticipated for Global Exhibitions) for standalone Informa, which, as a reminder, recently made a 30% premium recommended offer for UBM in order to create an events giant (65.5% owned by Informa’s shareholders and 34.5% by UBM’s).
As anticipated since 17 January (please refer to our UBM Latest), Informa today confirmed a 30% premium recommended offer for UBM whose shareholders will receive 1.083 new Informa shares and 163p in cash (valuing UBM at c.£3.9bn or 971p per share based on the 15 January 2018 closing price of 746p per Informa share; c.908p at yesterday’s closing).
The deal will create an events giant (65.5% owned by Informa’s shareholders and 34.5% by UBM’s) as UBM and Informa are respectively the world no.2 and no.3 events organiser behind RELX.
After a satisfactory +3.7% H1 17 consolidated organic revenue growth (accelerating from +2.5% for the same period last year and +1.6% for FY16) Informa reported a sound 10 month 2017 top-line organic trend of +3.2% (compared to +2.5% for the 9 month period last year). Reported revenues rose by 40% (Penton integration).
The group reiterated its FY17e guidance for “good progress”, saying it remains on track for a fourth consecutive year of growth in revenue, earnings and cash-flow. This will be supported by solid trading in Global Exhibitions (note the high H1 bias this year, with flat performance anticipated for the last 2 months; fewer Top 30 events in H2), modest positive growth in Academic Publishing and improving operating momentum in Business Intelligence.
Informa reported solid H1 17 results and above estimates, with revenue reaching £915.4m, up 41.3% (including forex for +12.8% and a perimeter impact – namely the Penton integration – for +26%) and up 3.7% underlying and adjusted OP at £285.1m, up 41% and 1% underlying (i.e. a 31.1% margin compared to 31.2% a year earlier; impacted by GAP depreciation and the mix from acquisitions). Adjusted diluted EPS improved by 12.7% to 24p and the interim dividend was raised by 6.2% to 6.65p.
The group confirmed being on its way to deliver and even outpace the promised £14m operating synergies in FY18 (half in FY17e; to be reinvested in growth measures) following the integration of Penton. It reiterated its FY17e guidance for “good progress”, saying it remains on track for a fourth consecutive year of growth in revenue, earnings and cash flow. This will be supported by strong trading in Global Exhibitions, a steady performance in Academic Publishing and improving operating momentum in Business Intelligence.
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Holding its Investors Day on 15 June, Informa confirmed that its 2014-17 Growth Accecleration Plan (GAP) was on track, while making a point on the benefits for its different divisions.
This came after last month’s trading statement when the group reiterated its FY17e expectations for a fourth consecutive year of growth in revenue, earnings and cash flow. This will be supported by strong trading in Global Exhibitions, a steady performance in Academic Publishing and improving operating momentum in Business Intelligence.
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Kape has today announced the successful, heavily oversubscribed raise of $115.5m from a mix of new and existing shareholders. The raise has been undertaken at a share price of 150p/share representing an 2% discount to prior close, and exceeds the initially targeted raise of $100m. $72m of the proceeds will be utilised to buy-out issued and eliminate deferred shares due to legacy founders of Private Internet Access (‘PIA’) which was acquired in Nov’19. The remaining $43.5m will be held for acquisition and R&D investment. We note that PIA’s executive team (CEO, CTO and COO) who joined Kape alongside the acquisition last year are all remaining in the business, with PIA’s founders only nominally involved post acquisition. The benefits to Kape are three-fold: 1) the raise increases liquidity within the shareholder register; 2) Kape is acquiring founder shares at 145p/share, an 3% discount to the price of the raise; and 3) the beneficial tax structure created at acquisition shifts to Kape shareholders (as opposed to PIA founders) creating a c.$50m cash benefit to Kape recognised linearly over 15 years. Updated forecasts for FY’21E generate FCF of $28.2m, representing a 7% yield.
Companies: Kape Technologies Plc
Kape has announced that it has raised gross proceeds of $115.5 million through a significantly oversubscribed placing and retail offer of 59.2 million shares at 150p and will use $72 million of the proceeds to buy out the two major vendors of PIA, the transformational deal which the Group completed at the end of 2019. The remaining $43.5 million will be used to strengthen the Group’s balance sheet as it looks to select further acquisitions. There is an additional tax-related cash benefit of around $50 million over 15 years that is now available to Kape following this change to the PIA deal structure. This seems an intelligent way of removing any potential share overhang while also adding further to the group’s M&A firepower. Kape will cancel the shares which it acquires from the vendors and will not issue the vast majority of the deferred shares. With trading still robust and guidance unchanged, we make no alteration to our underlying business assumptions. Our EPS estimates reflect the changes to the shares in issue, both existing and prospective.
Tremor has announced in today’s trading update that its platform has continued to gather further momentum since H1 20 results on 22 September, and it now expects FY20 revenue and EBITDA to be in the range of $340-360m for revenue and $30-36m for EBITDA. This leads us to upgrade our FY20 revenue forecasts by +6% to $350m from $330m, and upgrade our FY20 EBITDA by +32% to $33m from $25m at an incremental margin of 40%. This reflects that Tremor’s platform benefits from strong operational gearing that translates to EFCF, and we increase our FY20 net cash to $79m from $71m. This strengthening momentum for Tremor’s differentiated platform reflects that it is capitalising upon a rebound and shift in advertising spend through the success of the initiatives it launched in 2019 and the successful integration of Unruly, and we explain these factors in more depth from p9 of our 22 September report. Today’s announcement also marks the second upgrade to our Tremor forecasts since COVID-19 impacted the advertising market and Tremor in Q2, and this reflects that Tremor has adopted a prudent approach to its guidance. Applying a similar approach to our estimates, we conservatively do not change our FY21 forecasts, and this means that we continue to forecast FY21 organic revenue growth to $420m or +20% YoY, with organic EBITDA growth to $55m or +67% YoY. This conservative, strong FY21 organic growth means that Tremor looks substantially undervalued on 7x FY20 EV/EBITDA or 5x NTM, and a NTM EFCF yield of 6%; vs peers on 13-19x EV/EBITDA with NTM EBITDA growth of 18-47%, and EFCF yields of 1-2%.
Companies: Tremor International Ltd.
Kape’s interims saw Group revenues rise +97% y/y to $59.0m (organic: +12%), driven by a 245% increase in Digital Privacy sales (+47% organic). Organic growth was stronger than anticipated in Digital Privacy, above N1Se estimates of 30%-40% as a function of strong end-user demand. CyberGhost (VPN) and Intego (end-point protection) subscriber bases grew +10% and +11% h/h respectively. The main takeaway is Kape’s inflection to positive FCF ($6.7m; H1’19: -$1.8m) alongside increased cash investment into customer acquisition (+60% y/y to $29m). We see meaningful cash flow margins (>25%) being delivered in the next 1-2 years, with £31m of FCF forecast for FY’21E generating a 6.3% FCF yield (peers offer 3.5%-4%). Putting Kape on a 4% FCF yield implies an intrinsic value of >£3/share.
Kape has enjoyed a good first half of 2020 both in terms of operational progress and financial performance. Revenues increased 97% to $59.0 million (H1 2019: $29.9 million), a 12% increase on a pro-forma basis. The interim results reflect the Group’s continuing success in integrating its Private Internet Access (PIA) acquisition while growing subscriber numbers – now just shy of 2.4m in total - across the businesses. The focus on customer lifetime value is evident in the marketing spend and investment in new product development. Kape remains on track to meet previous guidance for the full year and expects to deliver synergies from the PIA deal at the top end of the mooted range. We believe that the Group has good revenue visibility and it continues to maintain a high level of user retention at 80%. We make no changes to estimates other than to reflect a higher amortisation charge. In our view, the interim results show that Kape continues to display the drive and capacity to meet the growing needs of consumers for digital privacy and security products in a rapidly evolving marketplace.
4imprint’s trading update indicates some encouraging signs, albeit within continuing general caution around the impact of COVID-19 on the US economy. Average order value is increasing as the proportion of apparel in the mix rises, with overall weekly revenue over the last four weeks around 65% of prior year. This is in line with the assumptions underlying our model and there are no changes to our forecasts. The group has a strong balance sheet, with $40.1m of cash at end October (lease debt only). We continue to view 4imprint as a high-quality investment proposition.
Companies: 4imprint Group plc
FOUR's update today shows that the business continues to move forward notwithstanding the difficult general environment caused by Covid. The continuing recovery in order intake is encouraging, and combined with a rise in the size of orders, means that revenues have already reached two thirds of 2019 levels at the same point in the year. Apparel has recovered particularly strongly and is operating at close to 2019 levels, driving 100% utilisation of the Oshkosh distribution hub. Recovering volumes are not just being driven by existing clients, but also by new client acquisitions, as a stable band is being maintained around this ratio (27% in H1-20, 29% in FY-19). Cash, at $US40.1m, is up on the $US37.5m figure reported in early August, both reflecting progress made and providing a robust platform for further progress, while taking account of the challenges inherent in the Covid backdrop.
In Q3 20, the decrease in organic net revenue slowed sequentially (-7.6% vs -15.1% in Q2 20). The recovery was driven by all the entities within the Global integrated agencies (75% of net revenue) and the Public relations activities. WPP posted the best results in the US, the UK and Germany. On the cost side, the Group is expected to achieve the high range of cost savings.
Companies: WPP Plc
Centaur’s Q3 shows high business resilience in the context of a challenging market backdrop. Ex-MarketMakers (“MM”; closed Aug’20), revenue decline slowed in Q3 to -16% y/y (Q2: -24%) whilst net cash actually rose (Q3: £9.3m; Q2: £8.4m) supported by exceptional cash management. Across Centaur’s portfolio, events and recruitment advertising saw continued CV19 impact, yet premium content performed well and the e-learning business saw continued strong demand. The Group also anticipate The Lawyer to achieve an FY’20E renewal rate of 105%. The Group is reinstating FY’20E guidance, with sales of >£32m from continuing ops (ex MM), and an adj EBITDA margin of c.10% (FY’19: 9%). Given improved visibility over FY’20 we also reinstate forecasts to the year end, yet longer term forecasting for events/ advertising streams remains challenging given fluidity in the macro backdrop. 0.75x EV/FY’20E sales (ex MM) looks inconsistent with growing premium content and elearning sales which make-up >50% of forecast FY’20E revenues.
Companies: Centaur Media plc
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.
Full year results were in line with the July trading update, a little ahead of our published estimates, with revenues up 12% and adjusted operating profit up 18%. Data Products (one-third of group revenue) performed particularly well, with underlying revenues up 21% and operating margin up 70bp to 35.0%. A strong balance sheet (net cash of £35.3m) supports stepped-up investment in both technology and in panel, underpinning the ambitious targets set out for the three remaining years of management’s five-year plan. The valuation remains at the high end of the range of peers.
Companies: YouGov plc
Pearson’s 9-month trading update highlighted that the rising digital activities were unable to offset the test centre and school closures linked to COVID-19. The group’s solid financial position remains a positive point to retain.
We are likely to raise our forecasts considering our below average expectations but expect to reiterate our cautious view on the stock.
Companies: Pearson PLC
Mirada plc* (MIRA.L, 65p/£5.8m)
Companies: Mirada PLC
The recovery of TV advertising was higher than expected in Q3 20 ((+8.2% vs -41.2% in Q2 20). TF1 benefited from an advertising catch-up in various sectors such as food, retail, personal care, e-commerce and automotive. The decrease in the cost of programmes (-21% on 9m 20) continued with no negative impact on audience share. There is no guidance for Q4 20 and 2021 due to low visibility related to unfolding of the COVID-19 pandemic in France.
Companies: Television Francaise 1 SA
We report on the performance of our momentum style screen since the last refresh three months ago and present the 25 new constituents. The screen underperformed small-cap and microcap indices modestly, though our previous focus stocks did significantly better. While momentum (as we express it) has outperformed smallcap significantly since inception of the screen in July 2016, this has arisen in shorter periods and appears to only coincide with a steadily rising small-cap index. We therefore consider this style screen to have limited predictive capability. We highlight seven stocks, which we think are interesting.
Companies: BMY CKT KEYS LGT MACF VER WYG