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: Research Comment
Kursziel: 2,10 Euro
Kursziel auf Sicht von: 31.12.2020
Analyst: Dario Maugeri, Cosmin Filker
Clearly higher revenues for gamigo AG in 2019; earning power from the platform strategy and open up of new markets and countries; investments realised in cloud technology useful in the current corona crisis phase; Target Price and Rating unchanged
On April 28th gamigo released its annual financial statement highlighting strong growth in sales and profitability. Key driver was the game segment (i.e. console, online and mobile games) which rose by 45.4% from EUR 29.67m to EUR 43.13m. The figure would have been even higher including EUR 7.07m in deferred revenues for games. The business in platform services seems stable, up EUR 0.17m to EUR 15.79m which led to a 30% increase of the consolidated turnover to EUR 58.92m (2018: EUR 45.29m).
Owing to the growth in revenues and positive synergies, gamigo EBITDA grew disproportionately to EUR 16.33m (2018: EUR 11.05m), +47.8% on an annual basis. In detail, the company reported an increase in purchased services to EUR 26.69m (2018: EUR 17.64m) mainly due to royalties and technology costs; the number includes also advertising and media costs which were previously included under other operating expenses. Personal expenses rose by EUR 6.84m to EUR 21.57m mainly due to new employees under the acquired US-based company Trion. The amortization and depreciation for intangible and fixed assets amounted to EUR 10.07m against EUR 8.46m in the previous year. After taking bond-related financial expenses of EUR 5.11m and tax income of EUR 0.82m resulting from deferred taxes into account, net income for the year rose by 21.8% from EUR 1.62m to EUR 1.97m.
Following successful M&A deals, intangible assets climbed to EUR 76.17m (2018: EUR 67.59m) around 61.1% of total assets on balance sheet. The number is mainly connected to acquired assets or to internally generated intangible asset for research and development activities.
Due to the fast growing business in games and favourable interests rates, the company gathers the opportunity to finance its investments and acquisitions issuing new debt. Examples are the tap issues of EUR 10.00 million in March 2019 and EUR 8.00m in June 2019 of gamigo senior secured floating rate callable bonds (coupon of 3 months EURIBOR, with a zero floor, plus 7.75 % per annum). Total bonds amounted to EUR 48.67m at the end of December 2019.
As part of our last research study, we already commented on the preliminary results of gamigo AG on 9 March 2020. As there are no significant changes following the publication of the annual report, we will leave our estimates confirmed in the last study unchanged. We will only update our estimates for Media and Games and update the valuation on the basis of the Media and Games annual report. This is expected to be available in June 2020.
Current events related to the coronavirus crisis and consequent economy slowdown are posing a challenge on the demand for luxury goods such as virtual items. This is mainly measured by the consumer confidence index trend. Although the scenario might impact faster the digital media business growth (B2B), the business in games, which is normally a non-cyclical business, might be positively affected by people leisure time. Assuming improved contributions of the acquired assets, new game launches as well as the Verve Wireless Inc. assets acquisition on January 2020 in the B2B business we have kept our target price of EUR 2.10 and the BUY rating for the group MGI plc unchanged.
Die vollständige Analyse können Sie hier downloaden: http://www.more-ir.de/d/20695.pdf
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Date (Time) completion: 07.05.2020 (8:41 am) Date (Time) first distribution: 07.05.2020 (10:00 am)
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