Informa

We estimate the group’s revenue exposure at around 12% to Gulf countries, almost all of which is from UAE (1st) and Saudi Arabia (2nd) when including the latest acquisitions. On the bottom line, the level of exposure is lower given that Informa operates through joint ventures in the Gulf (such as Tahaluf in Saudi Arabia) and that events are less profitable than the academic division. All things considered, the exposure on the bottom line must thus be around 8% in our opinion. 

In the very short term, the impact on activities should be marginal if the conflict does not extend beyond 40 days as we are currently in the Ramadan period, during which no B2B events occurs usually. However, we do not believe this is the base case scenario and organizers could cancel events prematurely, such as LEAP in Saudi Arabia and Middle East Energy in Dubai, important events that occur in April. 

A little bit further in the future, we could see some impact on business in the Gulf regions, not because of an impact on the safety reputation of those countries as the events there are mostly regional in nature, but indirectly as the economies of the region should be impacted by lower foreign investments. On top of that, the growth ambitions should be dampened as the capacity of those countries to host world-stage events might be impeded for a few years, unless Iran suddenly becomes more friendly with its neighbors. Informa should also be able to offset part of the shock by developing more other Asian hubs, with India or Turkey being top of mind. 

We thus expect a slight negative reaction this morning given the non-negligible exposure to the Gulf countries and will continue to monitor the situation to assess the extent of the impact on Informa’s business. Nonetheless, we think Informa should be able to adjust somewhat its geographic expansion priorities to offset the Gulf impact and thus reiterate our Add recommendation.