ii view: exhibitions organiser Informa shifts up a gear

AGM and year-to-date trading

• Revenue up 10.1% to £1.4 billion

Chief executive Stephen Carter said:

"The Informa Group has changed gears and we are now delivering 10%+ growth."

"Our strategy to focus on specialist markets, unique content and internationalisation is delivering double-digit underlying revenue growth, margin expansion and increasing profits and cash flows."

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ii round-up:

Publisher and exhibitions group Informa (LSE:INF) today maintained its full-year forecasts, but detailed year-to-date sales growth ahead of City estimates. 

Revenue for the five months to the end of May climbed 10.1% year-over-year to £1.4 billion, ahead of analyst estimates for the first six months of 8.2%. An additional £1 billion of subscriptions and exhibitor sales had been committed to by customers over the full year, with strong events rebookings flagged into 2025. 

Shares in the FTSE 100 company rose 1% in early UK trading having come into this latest news up around a tenth year-to-date. That’s below a 16% improvement for fellow exhibitions organiser and scientific research publisher RELX (LSE:REL), although ahead of a near 7% rise for the FTSE 100 index. 

Informa operates across the four divisions of Markets or exhibitions; Connect, organising on-demand experiences and seminars; Tech, specialising in technology company clients; and specialist knowledge research publisher Taylor & Francis.

Strong customer demand for live business-to-business (B2B) experiences combined with investment in author services, underpinning its global research output, had each contributed towards performance. 

An ongoing deployment of AI across the company is also delivering product benefits and operating efficiencies, including in research submission, data validation and content summaries. Informa, earlier this year announced an AI partnership with Microsoft Corp (NASDAQ:MSFT) under which it will pay Informa fees for access to its data. 

The FTSE 100 company continues to push ahead with plans to combine its Tech division with US marketing firm TechTarget. Informa will take a 57% stake in the new entity, to be named New TechTarget, which is expected to list on the Nasdaq in the final quarter of 2024. 

Broker UBS reiterated its ‘buy’ stance on the shares post the update. First-half results are likely to be announced late July/early August. 

ii view

Started in 1998, Informa helps businesses to connect and make better informed decisions. Markets, organising transaction oriented (B2B) events and the biggest exhibition organiser globally accounts for half of group sales, followed by publisher Taylor & Francis at 19%, Connect at 18% and Informa Tech the balance of around 12%. Geographically, North America generates close to half of sales, with China another key market at 14%, and the UK coming in at 6%.  

For investors, a backdrop of political elections, interest rate uncertainty and geopolitical tensions all provide grounds for potential headwinds. Group net debt rose during 2023 compared to 2022, costs for businesses generally remain elevated, while a forecast dividend yield of around 2.3% is below the 5%-plus at media rivals WPP (LSE:WPP) and ITV (LSE:ITV).   

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To the upside, business research and its potential to help make better decisions is likely to be important to many corporate customers, and the listing of its Informa Tech business should offer a more market orientated valuation. An end of 2023 net debt to adjusted profit ratio of 1.4 times remained within management’s comfort levels, while increasing profits and cashflows are expanding shareholder returns via share buybacks.

On balance, and despite continued risks, a consensus analyst fair value estimate above 950p should be sufficient to keep fans of this media company optimistic. 

Positives: 

• Diversity of businesses
• Ongoing £500 million share buyback

Negatives:

• Uncertain geopolitical global backdrop
• Exposure to currency moves 

The average rating of stock market analysts:

Buy