Informa: corporate schmoozing returns with a vengeance

Move over, Instagram and WhatsApp. Network effects are not just a seemingly unscalable moat for social media sites and communications platforms. They also apply, powerfully, to companies that facilitate corporate networking.

Consider Informa, the £10bn UK trade events and academic publications company that is posting a strong post-lockdown comeback. 

Following better than expected trading in the first five months of the year, Informa now guides to £3bn of revenues for the full year 2023. That is an increase of more than 30 per cent on the previous year and — encouragingly — above its high watermark in 2019. Operating margins are also higher, at about 25 per cent.

Informa’s rapid bounceback points to the strength of its competitive position. Run the leading trade fair in a sector — be it the World of Concrete or the splashy Monaco Yacht Show — and any firm worth its salt is virtually forced to stump up for a stand.

That was certainly the case pre-pandemic. Any fears that corporate networking might have moved online — along with business meetings — have now been put to rest. Indeed, the speed at which companies, particularly in China, have resumed their in-person schmoozing testifies to the importance of physical get-togethers. 

While the business has more than recovered, the share price is still about 15 per cent below pre-pandemic levels. Despite the upward trajectory of earnings, its forward price/earnings ratio at 18 times has not changed much since then. Earnings per share are forecast to double in the three years to 2025. That makes Informa an interesting proposition for investors.

True, revenues can be somewhat cyclical. In boom times, companies build bigger and glitzier stands in a jungle show of strength. In lean years, a trolley full of leaflets might be all they can afford. But, with competitive pressures few and far between for Informa, investors should stick around for more networking events.