Informa — FY24 off to a good start

Research: TMT

Informa — FY24 off to a good start

Informa’s FY23 results were strong, slightly ahead of guidance at January’s update. Underlying revenues grew 30.4% and adjusted operating margin expanded from 21.9% to 26.8%, with all four operating segments posting underlying revenue progress. The momentum has continued into FY24, and formal guidance has been edged ahead. The group generates significant amounts of cash, and leverage at end FY23 of 1.4x was below the guided range of 1.5–2.5x. With modest investment requirements and M&A opportunities of a large enough scale hard to come by, it seems likely that the share buyback programme will be extended further, underpinning the valuation.

Fiona Orford-Williams

Written by

Fiona Orford-Williams

Director, TMT

TMT

Informa

FY24 off to a good start

Media

QuickView

11 March 2024

Price

808.2p

Market cap

£11,072m

Share price graph

Share details

Code

INF

Listing

LSE

Shares in issue

1,370m

Business description

Informa offers investors exposure to the growing, global knowledge and information economy. It has a balanced portfolio, focused around two leading businesses of a large enough scale in academic markets and business-to-business markets. It operates through dozens of specialist brands that have strong market positions, combining a digital-first, data-driven mindset and products alongside live and on-demand events.

Bull

Exposure to high-growth B2B markets.

Growing subscription and recurring revenue base.

Strong balance sheet.

Bear

Lack of appropriate M&A opportunities.

High prices for potential acquisitions.

Uncertain geopolitical backdrop.

Analyst

Fiona Orford-Williams

+44 (0)20 3077 5739

Informa’s FY23 results were strong, slightly ahead of guidance at January’s update. Underlying revenues grew 30.4% and adjusted operating margin expanded from 21.9% to 26.8%, with all four operating segments posting underlying revenue progress. The momentum has continued into FY24, and formal guidance has been edged ahead. The group generates significant amounts of cash, and leverage at end FY23 of 1.4x was below the guided range of 1.5–2.5x. With modest investment requirements and M&A opportunities of a large enough scale hard to come by, it seems likely that the share buyback programme will be extended further, underpinning the valuation.

Leveraging specialist knowledge

Informa’s four segments are all underpinned by their positioning in the knowledge economy, with FY23 results showing the continuing importance of content-led live events in an increasingly digital landscape. Within the segments, the group’s many brands vary in scale, but each has a prominent position in its own market. Informa Markets (around half group revenue) had a full return of its programmes, including China, delivering 66% underlying revenue growth and an operating margin uplift from 18.7% to 28.9%. Groupwide portfolio expansion added 13% revenue growth and 17% of adjusted operating profit, adding 0.7% to operating margin.

Positive outlook for FY24 and beyond

Prospects are good for FY24, building on a strong Q1 to date, with around £1.5bn of full year revenue either already taken or booked. Guidance here is up £25m to £3,450–3,500m, with a £5m uplift to adjusted operating profit to £950–970m, representing a further nudge up in operating margin. FY24 plans include brand replications into new geographies, and management highlighted growth opportunities in India, the Middle East and Africa, all fast-developing markets with considerable local investment in venues and infrastructure. Informa generates strong cash flows, and the guidance is for free cash flow of £720m in FY24. Capex requirements are relatively modest at 3–4% of revenue and dividend payouts have been at around 40% of EPS, meaning that, in the absence of acquisitions of a large enough scale, there may be scope to further extend the share buyback programme.

Valuation

The ongoing combination of Informa Tech business with US-listed TechTarget, likely to complete in Q424, will provide an external market valuation for that segment, to be 57% owned by Informa. The rapid growth in Informa’s EPS, boosted by the lower number of issued shares, highlights the attractive value on a P/E basis.

Consensus estimates

Year
end

Revenue
(£m)

Adjusted operating profit* (£m)

Adjusted EPS* (p)

DPS
(p)

P/E
(x)

Yield
(%)

12/22

2,389

535

24.4

9.8

33.1

1.2

12/23

3,190

854

45.3

18.0

17.8

2.2

12/24e

3,475

964

53.0

21.2

15.2

2.6

12/25e

3,699

1,052

57.1

22.8

14.2

2.8

Source: LSEG. *Operating profit and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. EPS are fully diluted.

EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.

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This report has been prepared and issued by Edison. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

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This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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