Equity prospects

RELX

James Godrich, Fund Manager

Price£16.33

52 week high-low£17.51-£13.99

Net yield2.4%

Hist / pros per20.1-19.7

Equity market cap£32,609m

RELX is an information provider to specialist professional sectors, namely Science,Technology and Medicine (STM), Legal and Insurance. The theory is that as RELX moves from their historic business, publishing academic journals, towards providing value added analytics that help professionals to make better decisions, this should afford the business stickier revenue growth and higher structural margins.

That story remains as exciting as it ever was, however the black cloud that hovers over the shares for now comes from the European negotiating table; and not the one that you might be thinking of.

STM makes up just over 30% of revenues for the group and mostly provides journal access on a subscription basis to academic institutions globally. In a handful of regions those academic institutions use collective bargaining to achieve a better price. That has recently become the case in Germany where ‘Projekt DEAL’ have formed a consortium with the stated aim of ‘bringing about significant change to the status quo in relation to negotiations, content and pricing.’

Projekt DEAL would like to begin an open access model where authors pay a fee to appear in a journal which is thereafter made available to all. RELX prefer the existing relationship where authors get published purely based on the quality of their content and then institutions pay an annual license fee to gain access. The result for some time has been deadlock and uncertainty.

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