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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: 2.10 EUR
Kursziel auf Sicht von: 31.12.2020
Letzte Ratingänderung: 
Analyst: Dario Maugeri, Cosmin Filker

Strong enhancement in gamigo numbers in FY 2019, revenues up 30% and EBITDA
up 47.8%; organic growth doubled from 5% to 10% through the launch of new
games and updated contents, EUR 16.39m cash generation from operating cash
flows
 
For the financial year ending in 2019, gamigo AG clearly increased its
financial figures. Total revenues improved to EUR 58.92m (FY 2018: EUR
45.29m) driven by organic growth and by the integration of Trion World and
WildTangent. The double digit organic growth was related to regular content
updates in existing games such as in Fiesta Online and Last Chaos, the
relaunch of their desert operations game (e.g. graphic update), the
participation in game events (e.g. gamescom fair) as well as an optimized
game/user support system.
 
A significant highlight was the launch of the buy-to-play version of
ArcheAge Unchained. The company enjoyed a massive influx of players for
this new version, to the point of having to increase the number of servers.
For the whole FY 2019, gamigo total investments in strategic products and
platforms amounted to EUR 8.5m.
 
During this period, the company improved its efficiency and internal
organization. On the one hand, it reduced its tech spending, moving most of
the services from bare-metal data centres into cloud systems. The latter
increases manageability, reduces down-times and allows for a fast reaction
to changing demand. Tech spending was even reviewed in the acquired
companies, which, on average, after acquisition decreased their spending
from 30-40% to 5-10% of sales. On the other hand, advertising and media
sales teams were grouped under one team. This integration might improve
costs and technical optimizations.
 
Despite the increase in personal expenses ratio from 32.5% to 36.6% on an
annual basis, the EBITDA was improved by 47.8% to EUR 16.33m in 2019 (2018:
EUR 8.65m thus higher than the turnover rate. This shows management skills
in a developing economy of scale and synergies from the new acquisition.
Adjusted EBITDA for one-off items related to M&A transactions, financing,
legal and IT costs would be even higher to EUR 18.2m. The operating result
was somewhat offset by a EUR 1.61m increase in depreciation (mainly
purchase-price allocation depreciation) and around EUR 3.01m interests
expenses related to gamigo's bond, which after EUR 0.82m in tax, led to a
double-digit growth of 21.8% in net income to EUR 1.97m (2018: EUR 1.62m).
 
The operating cash flow has also developed very positively. The operating
cash flow rose significantly in the reporting period from EUR 10.48m (FY
2018) to EUR 16.39m. Basically, gamigo AG was thus able to finance the
investments made in 2019. After the investments for acquisitions and in
infrastructure (e.g. IT), the company had a positive free cash flow of EUR
4.53m (previous year: EUR 4.14m). For enhancing the financing position, two
further senior secured corporate bond tranches were issued on the Nasdaq
Stockholm in 2019. The value of these issues amounted to EUR 18m (current
whole bond value of EUR 50m), which were partly used to cover the inorganic
expansion. Cash position on balance at the end of 2019 amounted to EUR
21.96m, an amount that leaves flexibility for new strategic growth.
 
Since the gamigo numbers were within our expectations, we confirm our
forecasts for Media and Games Invest plc, last published on 20.02.20. With
a target price of EUR 2.10, we continue to assign our BUY rating.

Die vollständige Analyse können Sie hier downloaden:
http://www.more-ir.de/d/20209.pdf

Kontakt für Rückfragen
Jörg Grunwald
Vorstand
GBC AG
Halderstrasse 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR. Beim oben
analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,11); Einen
Katalog möglicher Interessenkonflikte finden Sie unter:
http://www.gbc-ag.de/de/Offenlegung.htm
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Date (Time) completion: 06.03.2020 (11:10 am)
Date (Time) first distribution: 09.03.2020 (10:00 am)

-------------------übermittelt durch die EQS Group AG.-------------------


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