Pandemic effects reverse

We cut our estimates substantially following the profit warning last week and ahead of Inderes’ Q3 report. The warning confirmed that virtual event momentum is flagging as business returns to normal following the pandemic, especially for unlisted customers which are important outside reporting seasons. We cut our fair value range from EUR 33-37 to EUR 21-24. We believe the defensive research business offers resilience in weak market conditions.

Q3 estimates cut after profit warning

Inderes cut its FY guidance in the profit warning, and we now cut our 2022-24 EBITA estimates by over 30%. Our new FY 2022 EBITA estimate is the mid-point of the guidance range. For Q3, we estimate sales of EUR 3.0m and EBITA of EUR 0.5m. In the Q3 report we will continue to focus on the case drivers: the number of commissioned research agreements; and management comments on progress in international operations.

Virtual event market now needs to grow from a lower base

The profit warning made it clear that the market for virtual events in 2020-21 was strongly supported by the pandemic and thus that future growth must come from a lower base. The volume decline owes largely to unlisted clients. Although this segment is small it provides crucial volumes outside the listed companies’ reporting seasons. On a positive note, unlisted client virtual event activity represents only 5% of total revenues, so there should be little more downside to come. Also, the company’s resilient commissioned research business should cushion a downturn.

Fair value range down to EUR 21-24 on estimate cuts and peer valuation

Our DCF valuation is down because of our estimate cuts and because we apply a higher WACC. Our estimate cuts also affect our peer valuation, where peer group multiples have fallen. Taken together, our fair value falls range from EUR 33-37 to EUR 21-24.