ITE exhibits value potential
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:
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...
About the author
Richard is companies editor of Interactive Investor and a columnist at Money Observer magazine. A keen private investor through his Self Invested Personal Pension, he manages two virtual portfolios. The Share Sleuth portfolio is a hand-picked collection of mostly small-cap value shares, while the Nifty Thrifty is a mechanical portfolio designed to pick large, successful companies at cheap prices.
Richard Beddard's tweets
- Any mechanical investor shld read: MT @Stockopedia: And this is just classic - Mining Fool's Gold - http://t.co/XnYbNXYzga — 44 weeks 4 days ago
- @MrContrarian :-) — 45 weeks 17 hours ago
- Mervyn King on Desert Island Discs now :-) — 45 weeks 20 hours ago
- MT @Stockopedia Another newish UK investing blog: http://t.co/KacB5XFF1P < Uses residual income model, not seen that b4 regularly on a blog — 45 weeks 4 days ago
- @Thevalueteam I agree, but its hard to go to cash... — 46 weeks 1 day ago
- Barel Karsan
- Expecting Value
- Gannon on Investing
- Mark Carter
- Musings on Markets
- My Investing Notebook
- Oddball Stocks
- Peston's Picks
- Philip O'Sullivan
- Seth's Posterous
- The Value Perspective
- Turnkey Analyst
- UK Value Investor
- Value Stock Inquisition
|Bid / Ask||215.8 / 216.2|
|Day Range||213.3 / 219.7|
|52Week Range||187.90 / 323.47|
|Last Update: 16:35:01 (17/04/14)|