Interactive Investor

ii view: Euromoney flags continued recovery at events business

31st March 2022 11:43

Keith Bowman from interactive investor

Despite losing some sales to Russia, shares for this information company are up year-to-date. We assess prospects. 
 

First-half trading update to 31 March

ii round-up:

Business information provider Euromoney Institutional Investor (LSE:ERM) today detailed trading which had remained in line with management’s own expectations as it suspended business with clients in both Russia and Belarus. 

Further strong revenue growth had been generated in the second quarter to the end of March, as momentum in subscriptions persisted and a recovery at its pandemic-hit events business continued to unfold. Sales to Russia and Ukraine over its last full financial year accounted for just 0.3%, or £1 million of overall revenues. 

Euromoney shares rose by more than 1% in UK trading, leaving them up by more than 5% year-to-date. Shares for fellow event organisers RELX (LSE:REL) and Informa (LSE:INF) are up by around 0.1% and 17% over that time. The FTSE All World index is down over 4% so far in 2022. 

A consistent improvement in booking trends had been seen for Euromoney's events business since the start of the year, with higher revenues achieved at many of the larger events than for their pre-pandemic equivalent.
   
Underlying subscription growth at its Fastmarkets and Financial and Professional Services business had stayed strong, while the turnaround at its Asset Management business has continued ahead of plan. 

In the aftermath of flexible working being introduced across the company, opportunities to reduce office costs had been identified. There'll be an update on this at first-half results scheduled for 19 May. 

ii view:

Founded in 1969, Euromoney is today a global provider of market intelligence, price discovery and conference events. Its sales are generated from a combination of publication subscriptions, paid advertising across its publications and event organising. Its brands include Euromoney itself, BCA Research, Ned Davis, Fastmarkets and Institutional Investor. 

For investors, outlook uncertainty, including the ongoing pandemic which had previously hindered its events business, should not be forgotten. The interim dividend payment was previously omitted under the pandemic, while an estimated one-year forecast price/earnings (PE) ratio above the 10-year average suggests the shares are not obviously cheap. 

More favourably, a recovery at its events business continues to evolve. A turnaround at the Asset Management division is also running ahead of plan, while costs remain a focus for management, with potential property savings now in the pipeline. In all, and with the consensus analyst estimate of fair value stood at over £11 per share, room for longer-term optimism looks to persist. 

Positives: 

  • Product and geographical diversity
  • Targeting cost savings

Negatives:

  • Total 2021 dividend cut from that paid in 2019
  • Ongoing pandemic outlook uncertainty

The average rating of stock market analysts:

Buy

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