Expansion Into Brazil And Saudi Arabia Will Capture New Audiences In 2025

Key Takeaways

• Strategic expansion into new markets and successful event launches are expected to drive significant revenue and earnings growth.
  
• Focus on sustainability and ESG improvements may enhance market position and attract environmentally-conscious clients and investors.
  
• Fiera Milano faces revenue predictability challenges due to biennial event scheduling, geopolitical uncertainties, unmet acquisition targets, and cash flow reliance on high-yield events.

Catalysts

Fiera Milano SpA, together with its subsidiaries, organizes and hosts shows and international events and fairs in Italy and internationally.

• The strategic expansion into new international markets, such as Brazil and Saudi Arabia, is expected to drive future revenue growth by capturing high-growth sectors and new audiences.
  
• The successful launch of new exhibitions and the strong performance of existing events, despite challenging calendar cycles, signals potential for increased revenue and improved earnings in 2025.
  
• The continued focus on sustainability and a significant improvement in ESG metrics can enhance Fiera Milano’s market position, potentially increasing revenue and net margins by attracting new environmentally-conscious clients and investors.
  
• The anticipated strong rebound in 2025 due to major biennial events and an expanded event portfolio can drive a substantial increase in revenue and EBITDA.
  
• The ongoing M&A strategy, with a focus on potential deals in 2025, is expected to boost total revenue and could result in higher net earnings by enhancing operational scale and synergies.

Fiera Milano Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Fiera Milano's revenue will grow by 9.4% annually over the next 3 years.
• Analysts assume that profit margins will increase from 7.1% today to 12.6% in 3 years time.
• Analysts expect earnings to reach €45.0 million (and earnings per share of €0.64) by about April 2028, up from €19.3 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 13.1x on those 2028 earnings, down from 16.4x today. This future PE is greater than the current PE for the GB Media industry at 9.3x.
• Analysts expect the number of shares outstanding to decline by 0.38% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.88%, as per the Simply Wall St company report.

Fiera Milano Future Earnings Per Share Growth

Risks

• The absence of key biennial events in even years, such as Host and Tuttofood, leads to significant revenue fluctuations, as evidenced by a decrease of €10.7 million in revenue for 2024, potentially impacting future revenue predictability.
  
• The EBITDA decrease from €97.1 million in 2023 to €83.6 million in 2024 highlights the sensitivity to event scheduling and suggests potential challenges in maintaining net margins consistently in off-peak years.
  
• Macro and geopolitical uncertainties, as well as industry-specific slowdowns, may impact revenue growth and the scale of international participation in Fiera Milano’s events, affecting overall earnings stability.
  
• The M&A targets have not materialized as initially expected, which may affect strategic growth plans and revenue augmentation that were envisioned through acquisitions.
  
• Shifts in net cash position, from €80.9 million in 2023 to €77.8 million in 2024, and reliance on high-yield events could strain cash flows, especially if larger expected events do not perform as planned in subsequent years.

Valuation

• The analysts have a consensus price target of €6.2 for Fiera Milano based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €358.0 million, earnings will come to €45.0 million, and it would be trading on a PE ratio of 13.1x, assuming you use a discount rate of 10.9%.
• Given the current share price of €4.45, the analyst price target of €6.2 is 28.2% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.