Overview
RELX PLC (REL) is a London based world’s leading global information services company. The company provides information-based analytics and decision tools to customers using innovative solutions which merge content and data with analytics and technology. The group’s operations are differentiated in four operating segments: Risk & Business Analytics; Exhibitions; Scientific, Technical & Medical; and Legal.The group employees over 30,000 personnel across 40 countries, customers in more than 180 countries around the globe. Erik Engstrom is the Chief Executive Officer of the group.

Trading Update
The company had shifted its focus on organic development by enhancing the customers’ values through its information and decision tools. The company announced a share buyback of £600 million out of which £250 million had been completed and remaining £350 million be deployed by the end of the year 2019. The company had a more focused approach on its portfolio by acquiring the selective targets which will add to the company’s growth strategies. The company year to date total consideration from acquisitions was £236 million with 5 successfully completed acquisitions. The company’s full-year outlook remains unchanged.

Financial Highlights – Financial Year 2018 (£, million)

(Source: Annual report, Company Website)

Driven by growth in all four market segments, the underlying growth of revenue stood at 4 per cent to £7,492 million, while reported revenue increased by 2 per cent, reflecting decent growth in revenue from its electronic and face-to-face formats. The company was benefited by tight cost control due to which the company’s underlyingadjusted operating profit grew ahead of revenue at 6 per cent to £2,346 million and the reported operating profit stood at £1,964 million. This meant that overall adjusted operating margin over the prior year improved by 0.2 percentage points to 31.3 per cent.  Adjusted profit before tax grew by 2 per cent to £2,145 million. The adjusted net profit attributable to the company's shareholders stood at £1,674 million and was up by 3 per cent, while reported net profit (attributable to company's owners) was £1,422 million, representing a decrease of 14 per cent against last year. The company’s Adjusted earnings per share stood at 84.7 pence, up by 6 per cent over the year, while at constant rates of exchange, it surged by 7 per cent. The company has maintained leverage at an appropriate level and has a strong balance sheet, with return on invested capital of 13.2 per cent. Total dividend for the year surged by 7 per cent to 42.1 pence per share.

Share Price Performance

Daily Chart as at June-21-19, before the market close(Source: Thomson Reuters)

On 21 June 2019, at the time of writing (before market close, GMT 10:46 AM), RELX PLC shares were trading at GBX 1,929.00, down by 0.59per cent against the previous day closing price. Stock's 52 weeks High and Low is GBX 1,961.00/GBX 1,466.50. The company’s outstanding market capitalisation was around £37.63 billion with a dividend yield of 2.17 per cent.

Valuation Methodology


Conclusion
Although the company had shown decent Top-line and bottom line performance in the financial year 2018, the demand of the company'sproducts and services may be adversely affected by macro-economic and political events, a risk which has intensified in the past few months. Moreover, RELX operates in a highly dynamic market with excessive competition, and demand continues to change due to rapid innovations in technology. Failure to adapt to these changes can have a material impact on the company's performance. Keeping in mind potential headwinds, and supported by valuation done using the above method, we have given a “Sell” recommendation at the closing price of GBX 1,940.50 (as on 20th June 2019) based on 15.50x NTM Price/Cash Flow (approx.) on FY19E cash flow per share(approx.).
 
*All forecasted figures and Peers information has been taken from Thomson Reuters.
*The Sell recommendation is valid for the current price as covered in the report (as on 21st June 2019).

Disclaimer

PLEASE BE ADVISED THAT YOUR CONTINUED USE OF THIS SITE OR THE INFORMATION PROVIDED HEREIN SHALL INDICATE YOUR CONSENT AND AGREEMENT TO THESE TERMS.
References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.
This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332.
The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine is not responsible for material posted on this website and does not guarantee the content, accuracy, or use of the content in this site. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated.
Kalkine do not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional licensed financial planner and adviser.