Informa PLC

Informa PLC (LON: INF) is the UK based media company. It provides specialist digital information, consultancy and research services in over 30 countries, and more than 25,000 businesses worldwide. It was incorporated in the year 1998, and currently, it has over 100 product brands to serve with a workforce of 2,000 people.

On 12^th June 2020, the group will hold its annual general meeting.

16th April 2020: Informa has proposed the placement of new ordinary shares at 0.1 pence each. The group also affirmed that the placing and subscription shares would not exceed 250,318,000, representing 19.99% of existing issued capital.

Trading Update (as on 16^th April 2020)
In the first quarter of 2020, the group has given resilient performance with its well-positioned subscription related business (c35% of revenue). In subscriptions-related business, the group has shown consistent performance at Taylor & Francis vertical, underpinned by robust subscription renewals. On other hand, in events-related businesses, the group gave a solid start to the year at Informa Markets. The group has also announced the extension of COVID-19 Action Plan and subsequently, taken the measures related to cost reduction, temporary suspension of dividends and issue of additional equity for liquidity.

Financial Highlights of FY 2019 (GBP Million)

(Source: Full-Year Results Company Website)

During the financial year 2019, the revenue surged by 22 per cent to GBP 2,890.3 million as against GBP 2,369.5 million in FY2018. The group’s statutory operating profit increased by 48.2 per cent to GBP 538.1 million in FY2019 from a statutory operating profit of GBP 363.2 million in FY2018. The dividend per share stood at 23.5 pence for the period. The group also stated about current focus on the specialist markets, brand building and technology deployment over the past six years. In the wake of Covid-19, they have postponed their events calendar in 2020; hence, it would certainly impact their event business, while subscription business continues to grow.

Share Price Performance

Daily Chart as on 16^th April 2020, after the market closed (Source: Thomson Reuters)

Informa’s shares closed trading at GBX 437.4 on 16^th April 2020, up by 4.94% against the last day closing price. Stock's 52 weeks High is GBX 900.80 and Low is GBX 326.70.

Valuation Methodology


Conclusion
Informa PLC has shown growth in turnover and profitability for the consecutive six years. Even in 2019, both the top-line and the bottom-line performance has improved for the period. In many individual markets, the company operates close to its customers, which provides a depth and breadth to the business with over 450 B2B brands.

The company’s subscription-based, information and specialist knowledge business are likely to grow and not seen in material impact due to Covid-19 so far. Hence, it is expected to generate lucrative cash flows. Moreover, the group has introduced COVID-19 Action Plan, which is assisting in preserving strength and building stability in the first half of disruption in 2020.

From the perspective of the media market, artificial intelligence is entering a new growth phase, due to the convergence of several trends. With the acquisition of UBM, the group now enjoys depth in a range of specialist markets with an international balance and reach. The company continues to grow consistently in Events and Exhibitions despite headwinds in its Fashion and Middle East businesses.

Over the past four years (FY15 - FY19), the company’s revenue surged from GBP 1,212.2 million in FY15 to GBP 2,890.3 million in FY19. Compounded annual growth rate (CAGR) stood at 24.26 per cent.

Based on decent prospects and support from the valuation as done using the above method, we have given a “Hold” recommendation at the closing price of GBX 437.40 (as on 16^th April 2020).
 
 
*All forecasted figures and peers information has been taken from Thomson Reuters.

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