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Last close As at 01/06/2023
-902.00
▲ −34.00 (−3.63%)
Market capitalisation
GBP1,043m
Research: TMT
YouGov’s trading update covering the six months to end January confirms that the group is on track to meet the full year market revenue consensus of £264m, 19% ahead of the prior year. This is a little ahead of our modelling (£255m), so we have adjusted accordingly. Our operating profit forecast is unchanged, reflecting a slight shift in mix towards Custom Research, which runs with structurally lower operating margins than Data Products. The search for a new CEO is ongoing, with current CEO Stephan Shakespeare set to step across to be non-executive chair in August. YouGov’s strategic plan for FY24–26 remains in the preparation phase.
YouGov |
Resilience in a more difficult macro environment |
Trading update |
Media |
27 January 2023 |
Share price performance
Business description
Next events
Analyst
YouGov is a research client of Edison Investment Research Limited |
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YouGov’s trading update covering the six months to end January confirms that the group is on track to meet the full year market revenue consensus of £264m, 19% ahead of the prior year. This is a little ahead of our modelling (£255m), so we have adjusted accordingly. Our operating profit forecast is unchanged, reflecting a slight shift in mix towards Custom Research, which runs with structurally lower operating margins than Data Products. The search for a new CEO is ongoing, with current CEO Stephan Shakespeare set to step across to be non-executive chair in August. YouGov’s strategic plan for FY24–26 remains in the preparation phase.
Year end |
Revenue |
PBT* |
EPS* |
DPS |
EV/EBITDA (x) |
P/E |
07/21 |
169.0 |
31.1 |
21.1 |
6.0 |
22.1 |
47.4 |
07/22 |
221.1 |
34.6 |
23.2 |
7.0 |
16.5 |
43.2 |
07/23e |
264.0 |
51.4 |
33.0 |
10.0 |
13.8 |
30.3 |
07/24e |
300.0 |
60.0 |
38.9 |
11.0 |
12.3 |
25.7 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Expansion at the operating margin level
The increasing level of productisation, the growing use of YouGov’s various Centres of Excellence globally to support regional operations and the greater use of internal panel for custom work are all helping to lift the operating margin. Despite the shift in mix, our modelling anticipates a FY23 operating margin of 18.4%, up from 16.5% in FY22, moving to 19.0% in FY24e (previously 19.0% followed by 19.7%). This is a little short of the target built into the expiring strategic plan to double operating margin across FY19–23. The potential for future margin expansion remains good as the group moves more of its work onto a self-serve platform basis, alongside the custom research offering.
The United States remains major driver
The new strategic plan is likely to be presented in the spring and will cover a shorter period, from FY24–26, and will also likely have an associated long-term incentive plan for senior management. However, this is structured, it is likely to require the group to continue to grow its US presence and client reach. Short-term, the United States is presenting some encouraging opportunities (of scale) and there are some signs of recovery in the UK, but it is not yet clear if this is sustainable. The mood music should be clearer by the time of the results in March.
Valuation: Off lows, but still well off the peak
YouGov’s share price is now around 30% above the low it hit around the time of the publication of the full year results (October 2022) as the market has become more nuanced in its valuations of high growth and tech stocks. Over 12 months, however, it is down 19%, while global peers’ share prices have declined 31%. Shakespeare has confirmed that he has no intention of selling his 7.9% shareholding, which should provide comfort that there is no associated overhang.
Exhibit 1: Financial summary
£'000s |
2020 |
2021 |
2022 |
2023e |
2024e |
||
Year end 31 July |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
152,441 |
169,000 |
221,100 |
264,000 |
300,000 |
Cost of Sales |
(23,375) |
(26,200) |
(33,700) |
(41,520) |
(47,114) |
||
Gross Profit |
129,067 |
142,800 |
187,400 |
222,480 |
252,887 |
||
EBITDA |
|
|
39,215 |
45,900 |
61,600 |
73,200 |
82,400 |
Operating Profit (before amort. and excepts.) |
|
|
21,830 |
26,100 |
36,400 |
48,500 |
57,100 |
Intangible Amortisation |
(12,885) |
(15,300) |
(20,400) |
(20,000) |
(20,000) |
||
Share based payments |
(2,900) |
(5,100) |
(2,900) |
(3,000) |
(3,000) |
||
Exceptionals |
(6,630) |
(6,500) |
(6,300) |
(2,500) |
(2,500) |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
15,200 |
19,600 |
30,100 |
46,000 |
54,600 |
||
Net Interest |
7 |
(100) |
(4,700) |
(125) |
(125) |
||
Profit Before Tax (norm) |
|
|
24,737 |
31,100 |
34,600 |
51,375 |
59,975 |
Profit Before Tax (IFRS16) |
|
|
15,207 |
19,500 |
25,400 |
45,875 |
54,475 |
Tax |
(5,812) |
(6,400) |
(7,800) |
(12,845) |
(15,253) |
||
Profit After Tax (norm) |
18,925 |
24,700 |
26,800 |
38,530 |
44,722 |
||
Profit After Tax (IFRS16) |
9,395 |
12,500 |
17,500 |
33,030 |
39,222 |
||
Average Number of Shares Outstanding (m) |
106.7 |
109.7 |
109.9 |
111.5 |
111.5 |
||
EPS - normalised (p) |
|
|
15.7 |
21.1 |
23.2 |
33.0 |
38.9 |
EPS - IFRS 16 (p) |
|
|
9.0 |
11.5 |
15.7 |
29.6 |
35.2 |
Dividend per share (p) |
5.0 |
6.0 |
7.0 |
10.0 |
11.0 |
||
Gross Margin (%) |
84.7 |
84.5 |
84.8 |
84.3 |
84.3 |
||
EBITDA Margin (%) |
25.7 |
27.2 |
27.9 |
27.7 |
27.5 |
||
Operating Margin (before GW and except) (%) |
14.3 |
15.4 |
16.5 |
18.4 |
19.0 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
108,122 |
116,091 |
145,200 |
152,900 |
155,167 |
Intangible Assets |
84,611 |
89,611 |
118,355 |
125,755 |
127,755 |
||
Tangible Assets |
23,511 |
26,413 |
26,791 |
27,091 |
27,358 |
||
Investments |
0 |
67 |
54 |
54 |
54 |
||
Current Assets |
|
|
70,255 |
82,409 |
95,200 |
128,975 |
170,147 |
Stocks |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
34,239 |
40,700 |
53,700 |
61,974 |
71,247 |
||
Cash |
35,309 |
35,509 |
37,400 |
62,900 |
94,800 |
||
Current Liabilities |
|
|
(52,813) |
(67,200) |
(90,500) |
(97,361) |
(108,238) |
Creditors |
(52,813) |
(67,200) |
(90,500) |
(97,361) |
(108,238) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
(16,226) |
(19,300) |
(24,900) |
(24,900) |
(24,900) |
Long term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Other long term liabilities |
(16,226) |
(19,300) |
(24,900) |
(24,900) |
(24,900) |
||
Net Assets |
|
|
109,338 |
112,000 |
125,000 |
159,613 |
192,176 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
38,411 |
45,100 |
68,800 |
77,833 |
84,950 |
Net Interest |
(7) |
(500) |
(900) |
125 |
125 |
||
Tax |
(3,184) |
(7,100) |
(6,900) |
(12,845) |
(15,253) |
||
Capex |
(18,559) |
(21,100) |
(17,500) |
(23,300) |
(24,500) |
||
Acquisitions/disposals |
(7,451) |
(2,800) |
(25,400) |
(6,100) |
0 |
||
Financing |
(4,739) |
(2,200) |
(9,900) |
(2,000) |
(2,000) |
||
Dividends |
(4,298) |
(5,500) |
(6,679) |
(7,802) |
(11,172) |
||
Net Cash Flow |
173 |
5,900 |
1,521 |
25,911 |
32,149 |
||
Opening net debt/(cash) |
|
|
(37,925) |
(35,309) |
(35,509) |
(37,400) |
(62,900) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
||
Other |
(2,789) |
(5,900) |
370 |
(411) |
(250) |
||
Closing net debt/(cash) |
|
|
(35,309) |
(35,309) |
(37,400) |
(62,900) |
(94,800) |
Source: Company reports, Edison Investment Research
|
|
Research: Investment Companies
Finsbury Growth & Income Trust (FGT) has been managed by Nick Train for more than two decades. The trust’s 2021 and 2022 underperformance should be put into perspective, as during his tenure, the manager has outperformed FGT’s UK benchmark in 18 out of 22 years. Train is adhering to his long-term strategy of investing in high-quality companies that can grow regardless of the economic cycle, have high returns and low capital intensity, and can generate strong cash flows to support dividend growth. The trust’s historical annual portfolio turnover is around 3%, illustrating that the manager really does have a long-term perspective. FGT’s standing within the AIC UK Equity Income sector is commendable, with its NAV total return ranking first out of 20 funds over the last decade and third over the last five years, while its shorter-term rankings are also improving.
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