ITE Group (ITE)


ITE exhibits value potential

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 News of Global recession reaches Urumqi

Investors have been reappraising ITE’s growth prospects by the look of its chart, which isn’t surprising since it’s about as dependent on the global economy as a business could be.
ITE (ITE) organises international trade exhibitions and conferences in Eastern Europe, Russia and Central Asia, although it has outposts from Huddersfield to Kuala Lumpur and Urumqi.

Urumqi? It’s a Chinese metropolis equidistant from Kazakhstan and Mongolia:

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By revenue, ITE organises construction, oil and gas, travel, motor, fashion, IT and telecoms shows, all sectors affected by recession in major economies, spreading to emerging ones.

Plenty of reason for gloom, then, even some in ITE’s newly published annual report and recent interim statement, which talk of falling like-for-like sales of exhibition space mitigated by one off events and falls in the pound.

But, despite the worrying outlook, ITE has potential as a safety-first stock. Speculative excess is being squeezed from the share price, which is now around 11 times its average annual profits and the dividend yields over 8%, partly because ITE raised the dividend 18% in 2008.

ITE looks financially sound, with no long-term debt and net cash although I wonder why deferred income has risen so sharply. This is money received or due for services the company has yet to provide (exhibition space, I guess). It’s like a loan from ITE’s customers, which partially explains why the cash balances look so healthy.

Edward Strachan bought 150,000 shares at 67p in December. He’s ITE’s man on the ground in the CIS (aka bits of the former Soviet Union), an executive director, and consultant to ITE through his company Kyzyl Tan Consultants. Terry Pratchett could have named Kyzyl Tan, but it presumably originates like many of Strachan’s exhibitions from somewhere near the Caucuses.

He’s been with the company since 1993, owns over 6m shares, and the company justifies his contract, which earns him £328,000 plus a bonus of up to £365,000 a year this way:
Edward Strachan’s unique knowledge and skills of managing the exhibition business in the regions for which he is responsible, together with the requirement for him to reside abroad, warrants the Company entering into a consultancy contract.
The arrangement may be unusual, and the sums quite large, but it’s reassuring that a director with his experience and current knowledge is buying.
It could my pick of the week, but the week is still young...


[...] hard to choose the pick of the week. ITE has international appeal, like Domino. Both service a broad range of businesses, some, automotive [...]

[...] the nod for Share of the Week, though frankly Domino Printing Sciences, which just missed out to ITE last week, looks better to me. Tags: DNO, ITE, JEL, SNCL, TIG Category: [...]

[...] since ITE looks a safe bet on the basis of its share price and financial strength, I thought I should investigate a third big [...]

[...] Bottom-up, there’s much to like about ITE. It has cash (£30m at the end of February), not debt. It increased the dividend by 18% last year. One of its major shareholders, a very experienced director, bought 150,000 shares in December. The shares look cheap, it survived the Russian financial crisis of 1998 and it’s able to reduce its costs, and therefore maintain profit margins, if it has to. [...]

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