Informa PLC – Informa has Stability and Strength to the other side of the COVID-19 pandemic

FTSE 100 listed Informa PLC (LON: INF) is the United Kingdom-based Media Company. It is engaged in events, exhibitions, scholarly publishing, and information services.

The Company is expected to release the H1 FY20 results on 21 September 2020.

Recent News

16 April 2020: The Company raised approximately £1,001 million by issuing 250,318,000 new Ordinary Shares, wherein Goldman Sachs and Morgan Stanley acted as joint bookrunners.

Trading Update (as on 12 June 2020)

In this update, the Company affirmed that the recovery for Informa’s business would be gradual with lockdown easing. Regarding the division, the Group’s Subscriptions-related businesses were trading well, Informa Intelligence was delivering steady growth, and Pharma Intelligence business was performing well in drug development brands and clinical trials. The journal subscriptions business remained robust with steady growth and consistent renewals. The Group has taken cost reduction measures to tackle the uncertain times. In April 2020, the Company raised £1 billion of equity to strengthen the balance sheet and increase focus on long-term goals.

Share Price Performance


1-Year Chart as of 7 August 2020, after the market close (Source: Refinitiv, Thomson Reuters)

Informa PLC’s shares closed trading at GBX 395.50 on 7 August 2020, up by 2.17% against the last day closing price. Stock 52 week High and Low were GBX 880.20 and GBX 326.70, respectively.

From the technical standpoint, 14-day RSI is currently close to the oversold zone, which means there is a good potential for a short term rebound in the stock price.
 
Valuation Methodology



Risk Assessments
The Covid-19 pandemic and associated social distancing measures have been leading to cancellation or postponement of events. Moreover, the book sales business has been facing increased disruptions due to supply-chain and product availability issues. Further, the economic instability and currency fluctuations can also impact the business performance.

Conclusion
The activities in China has picked up pace now, and COVID-19 Action Plan has been progressing well. The Company’s subscription-based, information and specialist knowledge business shown decent growth in H1 FY20 and are likely to grow further and without any material impact due to Covid-19. The Group witnessed a strong balance sheet, with continuing costs controls and strong liquidity. Also, the Company is setting out a new plan to return the business to sustainable growth.  Overall, INF is looking forward to making significant investments to strengthen the balance sheet. As per the market, mostly all advertising companies have reported some recovery over a month period after a steep plunge.

Considering the uncertainties and market dynamics, we are currently maintaining the “Hold” stance at the closing market price of GBX 395.50 (as on 7 August 2020) and will recommend fresh buying at the right time.

 
Hyve Group PLC – Coronavirus disrupting events schedule

FTSE All-Share listed Hyve Group Plc (LON: HYVE) is a London, United Kingdom-based company, which is engaged in the event business. It was formerly known as ITE Group PLC.

On 6 October 2020, the Company is expected to release a trading update for Q4 FY20.

Recent News:

21 July 2020: The Company announced that all events were scheduled to take place in Shanghai from the end of July 2020. Post the cancellation of the Group’s largest event (Shoptalk); it is planning to organize a ground-breaking virtual event in Q1 FY21.

Trading Update (as on 29 July 2020)

In this update, the Company affirmed that it continued to take decisive actions to safeguard the business from the Covid-19 pandemic. However, the situations are still fluid with persistent travel restrictions and the likelihood for further lockdown. Therefore, the Company has limited events scheduled for FY20, which predominantly placed in China, Russia, Turkey, and Ukraine. The Company is expecting to generate annualised savings of £9 million in FY20 and £40 million in FY21 with the cost saving measures announced in May 2020. Further, the Company reported a strong stage of liquidity after the successful £126.6 million rights issue announced on 7 May 2020. The extent of the cash burn rate is dependent on the cancellation of the scheduled events. Regarding the insurance claims, the Company has agreed to a second payment of £5.5 million after receiving the first payment of £7.4 million. Overall, the Group is in a strong financial position to navigate through continued COVID-19 disruption and uncertainty.

Share Price Performance


1-Year Chart as of 7 August 2020, after the market close (Source: Refinitiv, Thomson Reuters)

HYVE’s shares closed trading at GBX 84.00 on 7 August 2020, down by 3.45% against the last day closing price. Stock 52 week High and Low were GBX 622.49 and GBX 65.76, respectively.

From the technical standpoint, shares were trading well above the short-term support level of 20-day simple moving average prices, which reflects an uptrend in the stock and carrying the potential to move up further.

Valuation Methodology



Risk Assessments
Due to the cancellation and postponement of events amid social distancing measures for controlling Covid-19 outbreak, the Company has been burning cash every month. Moreover, consumer confidence is battered in recessionary economic conditions. Therefore, the Company can face significant liquidity risk.

Conclusion
The Company has recognised better than anticipated savings with cost saving measures adopted in May 2020. Hence, it has good visibility over a significant portion of the FY21 savings target. Moreover, it has substantial liquidity after the right issue to provide a strong financial platform to weather COVID-19 crisis. Moreover, the Company has been pursuing claims under the insurance policies to stay resilient. It has already secured interim insurance payments of £12.9 million so far. The Group has been working closely with regional government and other stakeholders to kickstart the business with the return of events. Furthermore, it has omnichannel capabilities and provides market-leading events platform for many industries, regional authorities, and governments.

Considering the uncertainties and market dynamics, we are currently maintaining the “Hold” stance at the closing market price of GBX 84.00 (as on 7 August 2020) and will recommend fresh buying at the right time.
 
 
*All forecasted figures and Industry/Peer information have been taken from Refinitiv, Thomson Reuters.
*Dividend Yield may vary as per the stock price movement.

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