ReachX logo

Life after Harry Potter: How Bloomsbury is looking to future-proof its business

Publication Date: 08 Jun 2018 - By Gaurav Sharma (Editor ReachX) By Gaurav Sharma (Editor ReachX)
Actionable
Differentiated

Equity Fundamental Equity USA EU ex-UK China UK Telecom & Media Consumer

Whenever the London-listed international publishing firm Bloomsbury (LON: BMY) is mentioned in investor circles, most instantly identify it as the publisher and marketer of author J.K Rowling’s hugely successful money-spinning Harry Potter series. 

Life since the publication of the first Potter book has been good for Bloomsbury, a trend that continues to this day. For instance, take its latest set of financials published in May. Bloomsbury said revenue for the full trading year to 28 February came in at £161.5m; a rise of 13% on an annualised basis and its best performance since it was founded in 1986. 

Non-UK revenue grew by 16%, and 63% of the headline revenue for the financial year was actually generated overseas, providing an indication of the publisher’s corporate journey. Pre-tax profit for the period was up 10% to £13m.

Additionally, Bloomsbury’s cash pile currently stands at £25m, an uptick of just under 64% year-on-year with both consumer and non-consumer publishing contributing to its coffers. 

Its position of relative strength, in tandem with vibes from the publisher’s power-brokers point to Bloomsbury doing its utmost to future-proof and maintain its winning streak. Last month, it announced the acquisition of London-based academic publisher I.B. Tauris & Co which has a back catalogue of 4,000 titles and brings out around 200 new titles every year. 

Bloomsbury has been reasonably savvy with digital books hopes to take I.B.Tauris’ portfolio to the next level, as only 10% of the latter’s sales are in the digital format. The move ties in nicely to the board of directors’ ambition of building a "bigger Bloomsbury". 

There is a clear emphasis on "accelerating" sales growth in the US, Australia and India. Additionally, the company is also in the process of pumping investment dollars into Bloomsbury China; its subsidiary aimed at publishing books in English in the west for major Chinese publishing partners. 

So what should investors make of its bid to establish ambitious future pathways? If the response of the market is anything to go by, then it’s a firm thumbs up! In the year-till-date, Bloomsbury’s share price has jumped from 187.50p to 243p; an uptick of nearly 23%. 

It is indicative of the market’s faith in Bloomsbury’s growth and investment plans. A push into the burgeoning publishing markets of India and China, and expansion in the lucrative US market hold the company in good stead, as it focuses on its "nine biggest assets." 

These include the works of Tom Kerridge, Sarah J Mass, and, of course ,J.K. Rowling’s Harry Potter, even if the last Potter instalment came way back in 2007. The company’s dividend remains attractive. It is expected to rise from 6.7p a year earlier to 7p for fiscal 2018, and further over the coming 12 months. 

The share price has already smashed conservative price targets in the 225p to 240p range, and the 275p to 285p range could be the next natural target, given Bloomsbury’s future plans and ambitions. However, the publishing world remains fiercely competitive, and the company appears cognisant of that given its clear emphasis on moving on, if not away, from the Potter franchise. 

Disclosure:

I have no positions in any of the securities referenced in the contribution

I do not use any non-public, material information in this contribution

To the best of my knowledge, the views expressed in this contribution comply with UK law

I agree with the terms and conditions of ReachX

This contribution is for informational purpose and does not constitute investment advice nor is it an offer to sell or buy, nor is it a recommendation for any security.

Gaurav Sharma Editor ReachX

 

Most read

ReachX
1-15 Clere Street, EC2A 4UY
London, United Kingdom
info@reachx.co
ReachX
1-15 Clere Street, EC2A 4UY
London, United Kingdom

info@reachx.co
Sign up to our newsletter