Image source: Getty Images
The FTSE 100 rarely rewards patience as quickly as it had with Informa (LSE: INF) this spring. The stock’s recovered from a 719p low to around 866p – a 20% gain in a matter of months.
The big catalyst has been world leaders rediscovering the pleasures of signing memoranda, rather than exchanging missiles. And while that could change, there’s a lot to be optimistic about if things hold steady.
Trade shows
Informa’s the world’s largest B2B trade show organiser. The rise of video calls during Covid-19 was expected to be a big threat to these events, but that simply hasn’t materialised.
Instead, deals worth millions still get done over a below-average conference coffee. And Informa owns the leading gathering in any number of key industries, including:
| Event | Industry |
|---|---|
| Cannes Lions | Marketing |
| Dubai Airshow | Aerospace |
| Black Hat | Cybersecurity |
| GITEX | Technology |
| Fort Lauderdale International Boat Show | Boats |
This is where industry participants meet and being the biggest and the best is everything. The largest buyers attend the largest show, which attracts the largest sellers.
The unit economics are quietly beautiful. Informa rents its venues rather than owning them, so it doesn’t have any of the associated costs of maintaining and repairing buildings.
Its real assets — brands, exhibitor relationships, decades of attendee data — are intangible. As a result, 106% of operating cash becomes free cash flow, which is expected to exceed $1bn this year.
The end of the war changes the maths
The conflict in Iran explains the 719p low. A Middle East-centred events business was never going to fare well with an ongoing conflict in the neighbourhood and the obvious risk right now is that this reignites.
The memorandum signed by the US and Iranian leaders on 17 June changes the picture — at least for now. And it also shines a spotlight on inD, Informa’s newly finalised joint venture with Dubai World Trade Centre.
Informa holds a 52% stake in the business, which houses some of the biggest events in the world. The venture’s expected to generate revenues in excess of $650m in 2026, with margins above 30%.
There are reports that the partners are already eyeing a listing, with preparations for an early stock market launch said to be underway. That could be a big windfall for Informa.
Elsewhere, underlying revenues are up 6.4% in the first part of the year and this should translate to double-digit earnings per share growth. In other words, things are going well.
The risks… and the verdict
The obvious risk for investors is a restart of the Iran war. If the latest ceasefire proves as durable as conference Wi-Fi, things could look less a lot less certain for the inD IPO.
More generally, more friction in international trade’s a bad thing for the business. That means tariffs are also a threat worth paying attention to.
At a forward price-to-earnings (P/E) ratio of around 15, however, shares in a growing FTSE 100 company still look reasonably priced to me. I own the stock in my portfolio and I think it’s worth considering.
Should you invest £5,000 in Informa Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Informa Plc made the list?
Stephen Wright owns shares in Informa.
