BLOCKESCENCE PLC Original-Research: Media and Games Invest plc (von GBC AG): BUY

Directive transparence : information réglementée

08/09/2020 12:31

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
Empfehlung: BUY
Kursziel: 2.95 EUR
Letzte Ratingänderung:
Analyst: Marcel Goldmann, Cosmin Filker

Significant expansion of the mobile gaming business segment through the planned acquisition of freenet digital GmbH; start of strategic media cooperation with the freenet group, thus strengthening the media division

On 28 August 2020, Media and Games Invest plc (MGI) announced that it had reached agreement on the acquisition of freenet digital GmbH as part of a strategic partnership with the parent company freenet AG. freenet digital GmbH was founded in 2000 and specialises in digital mobile entertainment content.

freenet digital GmbH distributes more than 1,500 mobile games via its own platforms as well as other digital entertainment products. With the acquisition of freenet digital GmbH, MGI strengthens its mobile games offering and greatly expands its business activities towards this fastgrowing business segment. Most recently, mobile games only accounted for 1.0% of total revenues in the gaming division. It should be noted that, according to market experts, the mobile gaming segment is the fastest growing area of the gaming industry with double-digit growth rates and at the same time accounts for a large part of the revenues of the global gaming market.

According to the company, the purchase price for freenet digital GmbH is in the upper single-digit million range and is to consist of a cash and share component. The closing of the M&A deal is scheduled for 30 September 2020.

Besides the acquisition of the gaming and entertainment division, MGI and freenet AG have announced that both companies intend to enter into strategic cooperation in the media sector. In this context, MGI is to support freenet AG in acquiring new customers by means of targeted online and mobile marketing activities.

The MGI management expects an additional contribution to sales of EUR 13.0 to EUR 15.0 million and an additional EBITDA of EUR 2.0 to EUR 3.0 million as a result of the takeover. We assume that this expected revenue and earnings contribution will only be achieved after freenet digital GmbH has been fully integrated into the group's gaming division and the organization has been optimized. The company also anticipates additional revenue and earnings effects from the planned media cooperation.

Through the past takeovers of Verve, Applift and PubNative in the media segment, MGI has built up comprehensive know-how in the field of mobile advertising and at the same time acquired a critical mass for a comprehensive and far-reaching marketing of mobile content. Thus, MGI has laid a good foundation for dynamic growth in the mobile games sector.

Against the background of the intended acquisition, we have adjusted our previous sales and earnings forecasts upwards, whereby we had already partially included M&A activities in our previous estimates from 2021 onwards. For the current financial year, we anticipate only minor effects on our previous revenue forecast due to the expected first-time consolidation of the business activities of freenet digital GmbH in the fourth quarter and no positive effects on our previous earnings forecast due to expected one-off effects. Specifically, we now expect revenues of EUR 118.16 million (previously: EUR 116.16 million) and EBITDA of EUR 21.74 million (previously: EUR 21.74 million) for the current 2020 financial year.

For the two subsequent years 2021 and 2022 we now expect significantly higher sales and EBITDAs due to the expected acquisition effects. Specifically, we expect revenues of EUR139.28 million (previously: EUR132.28 million) and EBITDA of EUR26.98 million (previously: EUR25.87 million) for the 2021 financial year. For the 2022 financial year, which will follow on from this, we anticipate a further increase in the additional contribution to revenue and earnings, based on the increased use of synergies, and are therefore forecasting revenue of EUR162.12m (previously: EUR152.12m) and EBITDA of EUR32.34m (previously: EUR30.69m).

Based on our upwardly adjusted forecasts, we have also raised our previous price target to EUR2.95 per share (previously: EUR2.85). In view of the current price level, we continue to assign the BUY rating. The planned takeover should enable MGI to significantly expand its mobile games activities and thereby tap additional growth potential. In addition, the media division should also be significantly strengthened by the strategic cooperation with the freenet group and, as part of this, a new major digital customer should be acquired.

Die vollständige Analyse können Sie hier downloaden: http://www.more-ir.de/d/21563.pdf

Kontakt für Rückfragen
Jörg Grunwald
Halderstrasse 27
86150 Augsburg
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Date (Time) completion: 08/09/2020 (09:56 am) Date (Time) first distribution: 08/09/2020 (10:30 am)

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