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Euromoney's cautious optimism

Coronavirus has wiped out events revenue, but the group is promising more spending
November 19, 2020
  • Profits dropped off a cliff as events revenue crashed during lockdowns 
  • But management says that is confident in the outlook: committing to a dividend and further investment 
IC TIP: Hold at 1016p

Euromoney Institutional Investor (ERM) does not have a division that is dedicated to events – but it is spread across all three of its segments (asset management, pricing and data & market intelligence). As such, there was no part of the business that was not hit by lockdown restrictions this year, leading the group’s operating profit to drop by almost two-thirds to £34m. 

Yet management is still optimistic, even committing to the resumption of dividend payments. Some may take issue with the decision; the group's cash on hand stands at £28m, a 44 per cent reduction from FY2019, partly attributable to M&A activity. Indeed, its core subscription businesses posted underlying growth of 6 per cent, led by a 35 per cent rise in its data and markets intelligence division. The boost in that segment was helped by two acquisitions last year, BoardEx and Wealth-X. Indeed, Euromoney has insisted that bolt-on buys remain a key part of its strategy. 

With a £70m blow to event revenues, it is no wonder that management moved quickly to cut back costs by around £15m. But the company has not frozen spending, having set aside £5m to invest in its staff and bump up its technology spend.

While coronavirus rules this year have knocked a hole in Euromoney’s top line, the group’s fundamentals appear to be in relatively good nick otherwise. As the prospect of a Covid-19 vaccine comes into view, the company, supported by a resilient subscription base, though not encumbered by excessive debt, is better placed than some peers to ride out the current disruption. However, there is no compelling investment case on show. Hold.

EUROMONEY INSTITUTIONAL INVESTOR (ERM) 
ORD PRICE:1,016pMARKET VALUE:£1.11bn
TOUCH:1,014-1,020p12-MONTH HIGH:1,338pLOW: 697p
DIVIDEND YIELD:1.1%PE RATIO:35
NET ASSET VALUE:473p*NET DEBT:8%
Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201633633.417.423.4
201738740.732.730.6
2018245107.060.832.5
2019**40282.956.633.1
202033532.928.811.4
% change-17-60-49-66
Ex-div:26 Nov   
Payment:16 Feb   
*Includes intangible assets of £658m, or 602p a share **Restated

Last IC View: Hold, 886p, 4 Jun 2020