Research: TMT
Ascential is now emerging in its post-transaction form, with a clear focus on its events-led businesses in marketing and financial technology. FY23 financial performance came in ahead of market expectations, despite some headwinds in the fintech market, with a particularly good improvement in adjusted EBITDA margin in the marketing segment from 40.4% to 42.6%, delivered on 22% organic revenue growth. Corporate transactions have raised £1.2bn (with more to be generated through the sale of Hudson MX, currently progressing). £850m is being returned to shareholders via the combination of a tender offer, special dividend and an on-market buyback.
Ascential |
Clarity and focus on key platforms
|
Media |
QuickView
22 March 2024 |
Share price graph
Share details
Business description
Bull
Bear
Analyst
|
Ascential is now emerging in its post-transaction form, with a clear focus on its events-led businesses in marketing and financial technology. FY23 financial performance came in ahead of market expectations, despite some headwinds in the fintech market, with a particularly good improvement in adjusted EBITDA margin in the marketing segment from 40.4% to 42.6%, delivered on 22% organic revenue growth. Corporate transactions have raised £1.2bn (with more to be generated through the sale of Hudson MX, currently progressing). £850m is being returned to shareholders via the combination of a tender offer, special dividend and an on-market buyback.
Two continuing segments with diverse revenues
The continuing group, centred on the Lions platform for marketing and on Money 20/20 in fintech, derives its revenues roughly two-thirds from events (delegate fees and sponsorship) and one-third from subscriptions, benchmarking and advisory services. All these strands can be developed and expanded, given the size and inherent growth of the respective addressable markets, with digital products also deepening client relationships. With Cannes Lions, the net is being cast wider, in terms of target audience and physically within the city, with the event offering different opportunities and benefits well beyond the traditional awards. Money 20/20 is launching its Asian edition next month, which is tracking to plan. Although unlikely to contribute in FY24, the margin here should build to percentages in the high 20s to low 30s. The FY23 US edition was affected by shifts in the funding backdrop for early-stage fintech companies, which we expect to settle and for confidence to rebuild.
£850m outlined for return to shareholders
Post the Digital Commerce and WGSN disposals, completed early in 2024, the group received cash proceeds of £1.2bn and made a £0.5bn profit. The proposed return of £850m is in three parts: a tender offer up to £300m in shares via a Dutch auction (expected at c 331p), a special dividend of at least £450m and an on-market share buyback of up to £100m through FY24 and likely into FY25. The sale of Hudson MX is progressing. Pro forma end-FY23 net debt was £106m, with FY24 likely to close at around the same level, barring further M&A. Management guides to 1–2x leverage, stretching to 3x for a more substantive deal with speedy payback. Bolt-on acquisitions are more likely initially, but a third ‘leg’ remains an option.
Valuation: Reflecting strengths of underlying business
The share price has reacted positively to the various corporate developments and the multiples suggest it is now starting to reflect the underlying business prospects.
|
Consensus estimates
Source: Refinitiv. Note: *Adj. EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. |
EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.
|
|
Research: Industrials
Orrön Energy’s capital markets day reinforced its operational achievements and its strong growth pipeline. Since July 2022 Orrön has continued to deliver on its growth ambitions, by increasing its production capacity fourfold to 400MW. It also has a 40GW pipeline of organic greenfield development projects across five countries, positioning Orrön to capitalise from growing renewable targets and regulatory support. It has a strong balance sheet with €92m net debt at year-end 2023 and a revolving credit facility of €190m (€78m undrawn Q423). This is supported by forecasted long-term cash flows, with management guiding annual revenues of €35–75m and EBITDA of €10–50m at an achieved price of €30–70/MWh, having achieved an average price of €47/MWh in FY23.