Strategic review could lead to the sale of its asset management business

Euromoney (ERM) £13.78 

Gain to date: 17.6%

Original entry price: Buy at £11.72, 20 December 2018

A year-end trading update has provided a timely reminder of why we are positive on media group Euromoney (ERM).

On 5 November the company said full-year results would be slightly above its previous expectations, driven by growth in its pricing, data and market intelligence segment.

Sales are expected to be around £401m versus the analyst consensus forecast of £397m. The full year dividend is expected to be 33.1p versus market expectations of 32.8p.

This is a high quality business which benefits from subscription-based recurring revenue and significant barriers to entry generated by Euromoney’s high level of expertise.

The increasing focus on the data side is reflected in the current strategic review of the struggling asset management arm, which includes Institutional Investor magazine and the BCA investment research operation.

‘While the overall asset management market is under pressure, these look strong and relatively unique assets,’ says Numis analyst Steve Liechti about Euromoney’s business division.

Analysts at Peel Hunt believe a sale is ‘the most probable outcome’ from this process. The proceeds from any disposal could be directed towards acquisitions to help accelerate growth in the rest of the group.

Results for the 12 months to 30 September 2019 will be published in full on 21 November.

SHARES SAYS: Keep buying.

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