Original-Research: Media and Games Invest plc - von GBC AG
Einstufung von GBC AG zu Media and Games Invest plc
Unternehmen: Media and Games Invest plc ISIN: MT0000580101
Anlass der Studie: Researchstudie (Initial Coverage)
Kursziel: 1.90 EUR
Kursziel auf Sicht von: 31.12.2020
Analyst: Dario Maugeri, Cosmin Filker
Dynamic and profitable investment group within the synergetic gaming and media sectors
Media and Games Invest plc (formerly Blockescence plc) was created in May 2018 as a result of a business focus change from real estate to the current game and media segment. As a result of the new orientation, the group acquired a controlling stake in the gaming publishing platform gamigo AG. At the same time, the media sector was gradually strengthened, with a focus on social media and digital influencers companies.
Under the brand gamigo AG, there are grouped several titles (e.g. Fiesta, Desert Operations or Trove) which have recorded a long lifetime among users and a high conversion rate from users to paying customers. The latter is a significant metric in free-to-play games where revenues are generated from the sales of in-game virtual items and micro-transactions. In order to expand the business in the high-value U.S. market, gamigo acquired first the assets of Trion Worlds Inc. in October 2018 (i.e. the titles Trove, Rift, Defiance and ArcheAge) and then the casual games publisher WildTangent Inc. As usual for a technology company, the acquisitions led to a sharp increase in intangible assets, which turned to EUR 38.84m (previous year: EUR 18.13m) at the end of 2018.
Integrations and synergistic effects led to a higher level of profitability for gamigo AG in the first six months of 2019. A key metric in our financial analysis was the EBITDA margin, which was up to 29.3% in H1/2019 (from the previous 24.3%). In order to finance the growth, bonds with an outstanding volume of around EUR 55m have been issued: a) EUR 50m on gamigo level with a coupon of 7.75% and above the 3-month EURIBOR; b) a EUR 5m bond on MGI level with a coupon of 7.00%. However alone with its operating cash flows (around EUR 10.5m in 2018) gamigo was able to face acquisitions costs for the mentioned US assets.
The group MGI plc also carried out important acquisitions in digital media. The acquisitions strengthened the offer in business intelligence such as data and performance analysis and in social media marketing services such as influencers or YouTube campaigns. Therefore, synergies are expected in customer acquisitions, user performance analyses or offering video games advertising space (e.g. in-game advertising) aimed at a wider panel of potential clients.
The market for in-game virtual items has improved substantially in the last few years. According to the agency 'game', the in-game purchase sector improved by 28% from 2017 to 2018 in Germany. Video games are used almost equally among the different age cohorts in the country, with those 50 years old having the largest share. In free-to-play games, however, sales lie in making virtual items important to get new contents or having more of a chance to win the game, pushing purchase of goods and thus increasing the payment made per player.
In Q2 2019 gamigo recorded an increase in monthly active users of 149% (1.3m vs. 0.5m) accompanied by an increase of +1.1% in average monthly spending per player to EUR 46.1. Basis for our organic growth assumptions are the game updates, the launch of new games along with the social media advertising services. We have forecasted revenues of EUR 74.46m in 2019 and EUR 90,96m in 2020. Under our DCF valuation model, we have calculated a stock price target of EUR 1.90, and the rating is BUY.
Die vollständige Analyse können Sie hier downloaden: http://www.more-ir.de/d/19321.pdf
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Date (time) of completion: 11.11.2019 (9:42 am) Date (time) of first distribution: 11.11.2019 (11:00 am)
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