Ascential LON:ASCL the FTSE250 listed digital commerce company has seen its share price jump 51.4% since 19th September on the outcome of its strategic review, announcing the sale of two of its three business divisions and focussing solely on events and event management.
The London-based media company is planning to sell its digital commerce business for around GBP740m to US advertising corporation, Omnicom and dispose of its product design suite for GBP700m to private equity shop, Apex.
The company has said it will return GBP850m of the proceeds to investors, which has raised a cheer in the City.
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Ascential was formerly known as EMAP (East Midland Advertising Press) and owned a suite of magazines and directories, including the Angling Times, Retail Week, and Drapers. The company was founded in 1887, by chemist and Liberal politician Richard Winfrey, when he bought the Spalding Guardian in his home county of Lincolnshire, and combined the newspaper with other local ‘papers in the East Anglian region.
Magazine business divested
The company expanded under Winfrey’s son post-World War Two, and diversified into radio, events and data business. It changed its name to Top Right Group in 2012, a name it would keep for just three years until it rebranded as Ascential. The newly-named company no doubt saw the way the wind was blowing for magazines and the print media business and took its magazines digital-only in 2015 and ditched the EMAP brand (though not the naming-rights). Within two years it had divested from the magazine business entirely, selling its titles in a series of deals to focus on digital commerce, digital designs and events. The company listed in an GBP800m IPO in March 2016.
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The stock has been a bit of a roller-coaster, although the recent ramp in price no doubt cheered shareholders, the price is nowhere near the 450p it was threating to break through in summer 2021. Since then, Ascential’s shares were stuck on the down escalator, plunging to 187p before rallying after the announcement.
But can Ascential maintain its ascent? Bridgewise the AI analyst thinks so, rating Ascential as ‘Outperform’. The analyst said: “Looking at Ascential’s financials of 2Q23 reflected decent results. This typically translates into the stock performing on par with market performance for the upcoming quarter. Therefore, Ascential received an overall score of 78, translating into an ‘Outperform’ ranking.”
Ascential events drive performance
In its half year results to the end of June, Ascential reported an 18% rise in group revenues to GBP307.4m year-on-year, with the driver being its Events business’ revenue up 25% y-o-y. As for the bottom line, Ascential turned a 1H22 operating loss of GBP35.1m into a GBP0.7m operating profit. This has pleased analysts who were predicting the media company would break even some time this year. Management did not declare a dividend, which was also the case in 2020, 2021 and 2022, preferring instead to prioritise cashflow for acquisitions and its post-strategic review growth strategy.Ascential closed trading on 21st November at 277.4p. Over one-year the company’s shares have offered a 31.7% appreciation, and over the year-to-date a 35.2% increase with shares ranging between 187.2p and 297p over a 52-week period. The company has a market cap of GBP1.3bn.
The gamble to go all-in on Events is a brave move, especially in light of the disaster that Coronavirus wreaked on the events sector. The deals for its digital commerce and product development arms are not over the line yet, and until the money is banked they are not done deals. Nevertheless, the stock should be ‘one to watch’ over the coming months as it is due to report again in January 2024.
