Bloomsbury Publishing PLC (LON: BMY) – Achieved around 28% sales growth for the first four months of FY22. 

Bloomsbury Publishing PLC is an FTSE All-Share listed UK based leading independent publisher focused on the publishing of books and other related services. BMY has four operational business divisions - Adult, Children's & Educational, Academic & Professional, and Information. Moreover, the Company publishes 1,000 books and digital services every year.

On 27 October 2021, BMY will release H1 FY22 results for the six months ending 31 August 2021. 

Recent trend of Dividend Payments:

(Source: Company presentation)

• The Company is consistently paying regular dividends supported by the strong cash generation.
• The Company will pay a final dividend of 7.58 pence per share on 27 August 2021. Moreover, it will pay a special dividend of 9.78 pence per share on the same day. The ex-dividend date was 29 July 2021
• Meanwhile, the dividend grew at a CAGR of around 6.50% over the period of the last ten years.

Growth Prospects

• Strategic Acquisitions Led Growth: BMY had completed the acquisition of Zeus Limited and certain assets of Red Globe Press during June 2021. Both acquisitions made significant contributions towards June 2021 sales.

• Robust Growth in Digital Content: The Company had achieved an outstanding growth of around 49% in the digital resources sales during FY21. Moreover, the e-books sales had demonstrated an excellent jump of about 64% during FY21.
• Increased Demand from Academic Institutions: Around 2,200 academic institutions have trialled the Company’s products during FY21, an increase from 496 academic institutions during FY20.

Key Risks

• Cyber Crimes: The increasing number of cyber-attacks across several industries had posed serious threats, and the media industry had tried to combat these attacks.
• Workforce Shortage: The shortage looming for the information security workforce would lead to the other emerging risks in the sector.
• Technological Advancement: The failure to integrate the latest technology in digital learning tools may impact the brand reputation of the Company.
• Liquidity Risk: The prolonged closure of academic institutions can cause liquidity risk.

Now, we will analyse the Key Fundamental Statistics & Shareholding Pattern of Bloomsbury Publishing PLC.

Canaccord Genuity Wealth Management is the most significant shareholder as it holds nearly 10.63 million shares as of 30 June 2021. 

AGM Trading Update (for the four months ended 30 June 2021, as of 21 July 2021)

(Source: Company result)

BMY had shown a year-on-year sales growth of approximately 28% during the period. With regards to the divisional front, the Consumer segment revenue had witnessed a jump of about 26%, while the non-Consumer division sales remained 31% ahead of the last year. 

FY21 Financial & Operational Highlights (for the twelve months ended 28 February 2021, as of 02 June 2021)

(Source: Company presentation)

• The revenue had shown a modest growth of about 14% from £162.8 million during FY20 to £185.1 million for FY21, benefited by strong demand for titles in e-books, audio, and print format.
• The Company had witnessed excellent cash generation as the cash conversion ratio stood at 142% during FY21, while it was around 111% for FY20.
• On the profitability front, the pre-tax profit had shown a robust increase of around 22% during FY21.
  

Financial Ratios (FY21)

Share Price Performance Analysis

 (Source: Refinitiv; Analysis done by Kalkine Group)

On 19 August 2021, at 09:00 AM GMT, BMY’s shares were trading at GBX 350.82, up by around 2.58% from the previous day closing price. Stock 52-week High and Low were GBX 394.77 and GBX 185.18, respectively.

From a technical perspective, BMY is trading between the lower Bollinger band and the middle Bollinger band, indicating an upside potential in the stock price. The 14-day RSI stood at ~49.70.

Over the last one year, BMY’s stock price has delivered a positive return of ~73.08%, and it has outperformed the FTSE All-Share index (benchmark index) with a return of about 19.15% and the FTSE All-Share Media index (benchmark sector) with a return of about 35.23%. 

Valuation Methodology: Price/Earnings Approach (NTM) (Illustrative)

Business Outlook Scenario

BMY had maintained positive momentum into FY22 from the outstanding FY21 business performance. According to the current consensus market expectations, BMY is anticipating revenue of £193.4 million and profit before taxation & highlighted items of £19.3 million during FY22. Moreover, the sales during June 2021 got benefited from the two most recent strategic acquisitions, Red Globe Press and Head of Zeus. Furthermore, the Company would seek out further acquisition opportunities to drive the long-term growth strategy. The summer weather would boost up the success of two UK front list titles - Tom Kerridge's Outdoor Cooking and Psycho by the Sea by Lynne Truss. In a nutshell, the Company remained confident of generating long-term returns for the shareholders driven by outstanding product offerings and robust revenue growth.

Considering the robust sales growth at the beginning of FY22, strong contribution from acquisitions, robust liquidity profile, strong cash conversion, consistent dividend payments, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on Bloomsbury Publishing PLC at the current price of GBX 350.82 (as on 19 August 2021 at 09:00 AM GMT), with lower-double digit upside potential based on 22.29x Price/NTM Earnings (approx.) on FY22E earnings per share (approx.).

*The reference data in this report has been partly sourced from REFINITIV.

*All forecasted figures and Peer information have been taken from REFINITIV.

*Dividend Yield may vary as per the stock price movement.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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