Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on UBM. We currently have 36 research reports from 5 professional analysts.
UBM produced satisfactory FY 17 results with total revenue up 16.2% on a reported basis (reflecting the Allword integration) to £1,002.9m in line with recent guidance of about £1bn. Revenues were up +4.1% underlying, driven by annual events, up 5.3% organically (guidance was for at least +5%) compared to +3.1% in FY16. Adjusted OP reached £294.2m (AV: £281m), reflecting a solid 210bp margin improvement to 29.3% and ahead of our own c.28% forecast. Diluted adjusted EPS increased by 34.5% to 53.4p (+29.7% at CER) compared to AlphaValue’s at 49.4p and the board announced a final dividend of 18p (FY16: 16.6p), bringing the total dividend for the year to 23.5p, up 6.8%. Regarding the FY18e guidance, management only highlighted a “good momentum so far” as, being in an offer period, it is restricted on talking more about the outlook at this stage.
Informa (£6bn market capitalisation) has just officially announced a bid for rival and competitor UBM (£3bn capitalisation) whose shareholders will each be offered 1.083 Informa shares and 163p in cash. Informa will hold 65.5% of the new firm, with UBM owning 34.5%. Note that Informa has said that the Boards of the two companies are expected to approve the deal. The latter will create an events giant as UBM is the world no.2 events organiser behind RELX.
UBM reported H1 17 revenue of £448.4m, up by 18% or +8.3% at CER. Organic growth reached +1.9%, of which +2.7% for Events and -2.1% for Online and Marketing Services 5OMS). The consolidated adjusted OP rose by 19.6% to £111.7m, i.e. a margin improving by 30 bps to 24.9% from 24.6% (note that the medium term goal is for 30% i.e. 280bps above the FY16 level). Adjusted earnings were 23.6% higher at £77.5m, with diluted adjusted EPS rising by 37.3% to 19.5p (+27.5% at CER). FCF pre-dividend improved to c.£141m, compared to c.£82m a year earlier. The interim dividend per share was set at 5.5p (+1.9%), in line with our expectations and management said that the Board will review the dividend policy ahead of the full-year results (aimed at growing the FY17 dividend at a faster rate than in recent years when it was +1% to +2%). UBM reiterated its FY17e guidance for higher underlying revenue growth, supported by the Allworld acquisition (completed in January 2017; integration on track and even ahead) and the positive impact of biennial events. A further improvement in the margin and continued strong cash generation are also expected, helped by synergies and costs savings. Note that, due to a phasing impact (many of the group’s fastest-growing major annual events occur over H2), organic growth and profitability are expected to accelerate over the second part of the year. To date this has been confirmed by the current forward bookings (all events anticipated to grow except for Fashion, with a weak performance in North America, suffering from the reshaping of the supply chain due to online developments).
The top 20 companies using the CF Growth Profile beat the bottom 20 by 16% pa over last two years
UBM produced satisfactory FY 16 results with continuing revenue up 12.1% to £863m, more or less in line with our forecasts (£858m) with Events up 3.1% underlying. Total revenues were boosted by a significant forex impact (+£92m or 11.9%; sterling weakness linked) as well as £26.1m or 3.4% coming from the perimeter impact and were nearly flat at CER (+0.1%). Continuing adjusted OP rose by 19.2% to £234.8m (+£37.m after +£31.3m from forex and -£12.3m due to the down biennial year impact at Events), reflecting a solid 160bp margin improvement to 27.2% when we had expected 26.9%. Continuing diluted adjusted EPS increased by 31% to 39.7p (+12% at CER) compared to AlphaValue’s at 35.4p and the board announced a final dividend of 16.6p (FY15: 16.3p), bringing the total distribution for the year to 22p (versus 21.6p for the previous year; +1.9%). Note that FY16 was highly impacted by forex moves, linked to sterling’s weakness in the aftermath of the Brexit vote. 72% of UBM’s revenue is indeed denominated in dollars or in currencies linked to the dollar and the tailwind was 11.9% on total revenues and 15.9% on OP (higher drop through to profit reflecting the larger cost base in the UK). Far from being negligible… Regarding the FY17e guidance, management expects higher underlying revenue growth, supported by the Allworld acquisition and the positive impact of biennial events. A further improvement in the margin and continued strong cash generation are also expected, helped by synergies and cost savings.
As rates rise, "yieldy" stocks require careful consideration. Sustainability/track record key.
UBM announced in mid-December the acquisition of Allworld Exhibitions, a leading privately-owned Asian exhibitions business (250 employees) for a cash consideration valuing the business at US$485m. The deal will be fully debt-funded with existing credit facilities and a new $365m bridge facility to be replaced with new longer term debt in due course.
In a short trading update UBM confirms it has continued to perform in line with expectations. Major event performances since the Interims appear to be on trend and acquisitions are also on plan. The company signals no change to the trading outlook. In our last comment we highlighted the immediate value in the stock and it has performed well (+11.4%) as expected. We also commented that there was further upside to forecasts if FX rates held (our existing estimates are based on $1.32 vs spot of c1.25 and Euro 1.20 vs spot of 1.14). While this may edge up our Target Price potentially it isn’t enough to support a Buy rating and hence we move back to Hold. Speculation on the acquisition of a material Far East focused business has edged the stock back from recent peak at 744p. We doubt investors are hugely keen on substantially increasing exposure to this region (without a very strong case) given the push to expand North American exposure. In combination with the new uncertainty in the US this may result in a slowdown in acquisitions.
Reporting its H1 16 results at end-July, UBM confirmed that the full-year trading outlook was unchanged, except for the positive forex impact linked to sterling’s weakness (only 10% of total revenues in the UK), with more coming through over the important H2 period. Beyond currency, management expects little direct impact from Brexit on its businesses. The group otherwise produced satisfactory H1 16 results with continuing revenue up 8% to £380m (after a +6.5% impact from forex) and +1% organically for the adjusted figure (Events: +1.3%, Other Marketing Services or OMS: -0.4%) as there was some phasing impact (£2.1m revenue moved into H2). Continuing adjusted OP rose by 24.5% to £93.4m (c.11% due to the forex impact), reflecting a solid 330bp margin improvement to 24.6%. This was slightly helped by reduced strategic opex relating to the Events First transformation plan (£1.7m down from £4.6m). The operating margin was up 240bp before strategic opex. Continuing diluted adjusted EPS increased by 31.5% to 14.2p and the interim dividend was raised by c.2% to 5.40p per share. Note that following PR Newswire’s disposal (net cash proceeds of £490m) a £243.7m special dividend was paid to shareholders on 8 July.
There are two main issues to consider for the Media sector, UK recession and currency. Large and mid-cap B2B is likely to be a net beneficiary of sterling weakness as they are heavily exposed to US$, while exposure amongst small cap B2Bs is typically modest but may well be enough to offset any domestic weakness. B2B looks a good safe haven and Informa (TP690p, Hold) and UBM (TP605p, Buy) look good value. Marketing Services is a barbell subsector; WPP’s might overseas and in its offering will probably outweigh its still significant UK operation. At the smaller end individual client mandates will be more important, client losses are hard to predict and potentially UK expertise could look cheap to overseas businesses. Consumer media looks more vulnerable. A mix of high domestic exposure, cyclical exposure and high operational gearing looks poisonous. ITV, Rightmove and Autotrader look likely to suffer.
Companies: Informa Plc Ord UBM
UBM today released the final details regarding the return to shareholders in the aftermath of the PRNewswire disposal (please refer to our 22 March 2016 Latest) to Cision, controlled by GTCR Canyon Holdings Cayman L.P.
After 6 months of delays the disposal is finally closed. Investors will see half of the £490m net proceeds returned via a special dividend of 55.3p per share (register date 24th June, ex-dividend date 27th June and paid 8 July). The shares will then be consolidated (8 for 9), UBM will now have a much purer profile with Events (mostly trade exhibitions) being the key proposition. On a cum dividend basis the stock trades on 12.1x FY16 and 9.6x FY17 EV/EBITDA or just under 11x average for theFY16/17 biennial cycle. We indicated that the stock should command a higher rating with this improved growth focus and have increased our TP rating to 12x. This makes the stock worth c605p cum special dividend and c550p ex. We adjust our TP accordingly and this pushes the stock into Buy territory hence we upgrade.
Redcentric (RCN LN) Core holding which will keep on delivering | UBM (UBM LN) PRN disposal closed!
Companies: Redcentric UBM
UBM produced FY15 results globally in line with revenues for continuing operations (PRN newswire treated as a discontinued operation) amounting to c.£770m (comparable FY14: £550.5m), down 2% on an underlying basis (up c.£219m reported on a comparable basis after +c.£180m net acquisitions impact, +c.£27m biennial impact and +c.£26m forex). The adjusted operating margin for continuing improved to 25.6% compared with 24.5% on a comparable basis a year earlier, despite £7.4m of strategic opex and £5.9m headwinds from corporate costs, offset by the Advanstar integration, biennial events and forex. The Board announced a final dividend of 16.3p (FY14: 16.0p), bringing the total dividend for the year to 21.6p, up 1.4% from the previous year.
2015 results (revenues and operating profit) for the continuing business (PRN disposal announced but still not completed) are better than expected. Revenue was a marginal £1m ahead in the events unit while OMS (Other Marketing Services) was c5% better. Profitability was ahead at both the core Events business (c82% of continuing revenues) and OMS unit. The outlook statement reads confidently in the context of current macro uncertainties with an expectation of “Good growth”. This will be tempered by the planned rationalisation program. Events growth was 1% or 3.9% excluding rationalisation. Advanstar integration synergies are running ahead of plan ($6.1m in 2015 and $10m annualised run rate run rate). The disposal of PRN is still awaiting US clearance and the Company is guiding to the sale completing at the end of Q1 2016. There may be some concern that the risk of deal failure has risen given UBM is selling a business whose revenues are inextricably linked to market conditions through the volumes of announcements. The shares should respond positively to good results but after running on and the Emerging Market and Global macro risks in mind upside looks limited.
Research Tree provides access to ongoing research coverage, media content and regulatory news on UBM. We currently have 36 research reports from 5 professional analysts.
|15Jun18 15:20||RNS||Completion of Recommended Offer|
|15Jun18 11:27||GNW||Boussard & Gavaudan Investment Management LLP : Form 8.3 - UBM Plc|
|14Jun18 16:18||RNS||Holding(s) in Company|
|14Jun18 12:26||RNS||Scheme sanctioned by Court|
|14Jun18 10:38||GNW||Boussard & Gavaudan Investment Management LLP : Form 8.3 - UBM PLC|
|13Jun18 10:05||RNS||Rule 2.9 Announcement|
|11Jun18 15:01||RNS||Director/PDMR Shareholding|
Tencent shares slumped as much as 3.88% on Thursday after the Chinese technology giant missed analyst expectations, despite beating forecast on earnings. Revenue rose 21% year-on-year to 88.82 billion yuan. Profit attributable to shareholders beat analyst forecasts, rising 35% year-on-year to 24.14 billion yuan. The company's gaming division returned to growth, posting revenue of 27.3 billion yuan, up 8% year-on-year, with mobile games performing particularly well.
Companies: KAPE AVST BIDS CDM CNS DFX ECSC FLX FDEV GFIN IGP KWS NCC OSI SOPH SUMO TM17
In January, we provided a list of 11 stocks for 2019 that we believed would perform strongly with attractive catalysts that could lead to material outperformance. In this Quarterly Research Outlook, we revisit these views, analysing what has happened and how the remaining six months of the year could play out.
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CBS and Viacom have agreed to merge, ending years of on-and-off talks. The merger highlights a long effort to unite CBS and Viacom as the media companies seek to compete with giants like Disney and Netflix. Viacom CEO Bob Bakish will run the combined company, which will be named ViacomCBS.
Companies: EVRH ZOO AMO IMMO MIRA VRE
Warren Buffett once said that as an investor, it is wise to be ‘fearful when others are greedy and greedy when others are fearful’. Fear is not in short supply right now.
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British Airways said its flights were returning to normal after passengers had to endure cancellations, delays and long queues at London airports as the airline suffered its third major computer failure in a little more than two years. More than 60 flights to and from Heathrow and Gatwick were cancelled and more than 100 were delayed, according to the departure boards at the two airports.
Companies: KAPE AVST CNS DFX ECSC FLX IGP NCC OSI SWG SOPH
Kape Technologies has enjoyed another strong half year of trading driven by growth in sales of its suite of digital privacy products. The update for the six months ended 30 June 2019 states that revenue is expected to be around $29.6 million for the first half with Adjusted EBITDA of around $5.8 million. EBITDA growth is running ahead of that of revenue and it is also ahead of our full year expected growth rate as the Group continues to benefit from its customer acquisition strategy and new product initiatives. The update notes Kape’s continuing commitment to investment in its people and products. Recent notable successes of Intego in exposing two Mac security threats have brought enhanced appreciation of the Group’s brand and capabilities. Kape recently updated the market on this and on ZenMate’s new products. We note the strong H1 performance and respective growth rates for revenue and EBITDA in relation to our exacting full year expectations. Assuming higher EBITDA margins, we leave Adjusted EBITDA estimates unchanged while reducing revenues by 7% and 6% for FY 2019E and FY 2020E respectively.
Companies: Kape Technologies
Cello has announced today the acquisition of Innovative Science Solutions LLP (ISS) for an initial sum of $6.4m. ISS is a highly technical, scientific consultancy which complements Cello's existing healthcare capabilities. It extends Cello's footprint in the key US healthcare market, while financially, it accelerates EPS growth to a more meaningful rate in FY20E.
Companies: Cello Health
The good surprise was the lower decrease (better than expected) in organic net revenue in Q2 19 (-1.4% vs -2.8% in Q1 19). This reflected the continuing negative impact of the contracts lost in H2 18 tempered by new wins this year. In H1 19, the ‘headline’ operating margin decreased by 0.8pt to 11.9% of net revenue. WPP does not see a deterioration for H2 19 and is now more confident of achieving its 2019 guidance.
Parliamentary and Brexit developments continue to hold centre stage, although the precise path forward remains as unclear as ever. The uncertainty over Brexit, worries over a possible slowdown in the US and the outlook for global economic growth generally have all contributed to the recent falls in markets. While the rally seen since the start of the year has petered out, most indices have still made progress. In Share News & Views we comment on Bloomsbury Publishing, Bonhill Group*, Braemar Shipping Services*, Burford, Clarkson, LightwaveRF*, Marshall Motor Holdings and Synectics*.
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The recent CMD allowed themission’s newly-appointed CEO, James Clifton, to outline the direction of travel to best leverage group strengths. It also showcased Krow, bought in April 2018, and businesses being developed within the Fuse incubator, particularly Pathfindr. There was no new financial information. Increasing collaboration across group agencies gives a solid base for more cross- and up-selling to the low-churn, blue-chip client base. The valuation remains at a sizable discount to peers.
Companies: The Mission Marketing Group
Positive performance against its operational and financial KPIs in H1 results from Audioboom, a leading global podcast company, as it continues to take market share in a rapidly expanding market. H1 revenue increased 171% to $9.8m and adj. EBITDA loss roughly halved to $1.4m. With a growing number of brand advertisers and eCPM and sell through rates, Audioboom is investing for growth with increased spend on acquiring established podcasts, ensuring the retention of its current roster of talent and developing owned and operated co-produced content. This is being funded by H1’s placing and subscriptions as well as the new content $4m funding facility for minimum revenue guarantees. Audioboom is a trusted partner for podcasters looking to expand their audience and drive monetisation, advertisers to reach an attractive demographic and consumers to access entertaining content. Forecasts remain unchanged and we introduce a fair value of 475p/share.
Companies: Audioboom Group
Kape Technologies trading update revealed strong H1 performance from continuing operations. Revenues rose 24% y/y to $29.6m, with adjusted EBITDA margins improving to 19.6% (+260bps y/y). Strong growth is being underpinned by gains in data privacy, a market seeing strong structural growth as a function of rising consumer digital privacy awareness. Trading is in line with management expectations, and we make no changes to our full year forecasts. An EV/ Dec-19E sales multiple of 1.6x looks attractive for a company delivering an increasing proportion of high-quality recurring revenues, and we see a re-rating towards 2.5x-3.0x as possible as cash-generation improves.
Companies: Kape Technologies
H1 results from Auto Trader this morning has shown a performance in line with expectations at the half year. Net debt has been reduced and the company has continued its’ rolling share buyback programme. Our view on the stock has not changed, and we continue to view BCA Marketplace as a better alternative to play the sector with genuine structural growth opportunities on a pan European basis.
Companies: Auto Trader Group
GlobalData's 2017 final results highlighted three important elements which inform our positive view of its prospects; organic growth, acquisition integration and visibility of its revenues (c75%). In combination, this allows for upgrades to our 2018 and 2019 forecasts. GlobalData's proprietary data and content, alongside its knowledge within each of its industries enables it to support clients. It has a large addressable market and is not limited by opportunity. Potentially adding further industries would further increase its footprint. We believe that the Group will make further progress in this regard during 2018. On valuation, our DCF model suggests a theoretical value more than 10.0% higher than the current level.