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 Note
Empfehlung: Buy
Kursziel: 6.92 EUR
Letzte Ratingänderung: 
Analyst: Marcel Goldmann, Cosmin Filker

Capital increase for growth financing successfully carried out;
continuation of dynamic growth course expected; oversubscribed capital
measure opens up significant inorganic growth potential; price target
lowered to EUR 6.92 (previously: EUR 7.35) due to the dilution effect that
has occurred.
Successful capital increase for consistent implementation of the M&A
On 6 May 2021, Media and Games Invest plc (MGI) announced the closing of a
cash capital increase. Thus, in accordance with the previous company
announcement, the company has successfully completed the bookbuilding
process of the direct share placement, and resolved to issue 20,930,232 new
shares based on the authorisation granted at MGI's Annual General Meeting
on 15 April 2021. The issue price of the new shares in the direct share
placement was SEK 43 per share (equivalent to approximately EUR 4.30) and
was determined in an accelerated bookbuilding process.
The direct share placement was heavily oversubscribed and generated high
interest from both Swedish and international investors as well as existing
shareholders. The company has therefore decided to increase the direct
share placement to SEK 900.0 million (approx. EUR 89.0 million).
Upon completion of the transaction, the number of outstanding shares and
voting rights will increase by 20,930,232 shares, from 128,749,748 to
149,679,980, as a result of the direct share placement, which represents a
dilution of approximately 14.0% of the number of shares and voting rights
to the company for the existing shareholders. In parallel, the share
capital will increase by EUR 20,930,232 from EUR 128,749,748 to EUR
In addition, as part of the capital measure, the company announced that
both existing and new prominent investors participated in the capital
measure. According to the company's website, for example, the following
well-known 'long-only' investors have joined the shareholder group:
Top 3 new investors  shareholding in % also invested in, among others:
Janus Henderson Global Investors (UK) 5.50%  Embracer, Tencent, Activision
Didner & Gerge Fonder (Sweden)  0.50%  Embracer
BMO Global Asset Manager (UK)  0.30%  Tencent
In addition, the following investors, among others, further increased their
Top 3 existing investors shareholding in %* also invested in, among others:
Oaktree Capital (US)   9.10%  n/a.
Skandia Fonder (Sweden)   1.10%  Embracer, Evolution Gaming Group,
Stillfront,EG7, MTG
Finlandia Group (Nordics)  0.70%  n/a.
Following the announcement of the successful completion of the KingsIsle
acquisition in early February 2021, MGI intends to continue its growth
through the acquisition of further complementary games and media companies
or assets, as well as investing in further organic growth.
According to the company's own statements, it has an extensive pipeline of
potential acquisition targets within the games and media segments, many of
which could potentially be realisable candidates in the short term. With
the inflow of capital from the capital increase, the MGI Group intends to
strengthen its financial position in order to take advantage of these
acquisition opportunities in the short term, if necessary.
Forecasts and evaluation
As a result of the completed capital measure in conjunction with a reported
cash balance of EUR 51.70m at the end of the first quarter of 2021, MGI has
financial resources of around EUR 141.0m in our view. With this high
financial strength, we believe the company should now be in a position to
acquire two to three target companies from the M&A list (top 5)
communicated by MGI.
This would result in considerable growth and earnings potential as well as
extensive synergy effects within the group. It should be mentioned here
that the MGI management has already announced two to three acquisitions for
the current financial year. Since the completed capital measure has no
influence on our previous forecasts, which we had adjusted upwards with the
recently announced Q1 business figures, we are leaving our previous
estimates unaffected.
Should the MGI Group carry out further M&A transactions in the current
financial year following the acquisition of KingsIsle and LKQD, we will
adjust our existing forecasts and valuation accordingly. Due to the
dilution effect associated with the capital measure, we have determined a
new price target of EUR 6.92 per share and, thus, moderately lowered our
previous price target (EUR 7.35 per share). In view of the current price
level, we continue to assign a Buy rating and see significant price
Overall, we are convinced that the company will be able to continue its
successful growth strategy in the future and significantly increase
turnover and earnings. The acquisitions planned by the management for the
current financial year 2021 should increase the growth momentum to a much
higher level. This should also have a positive impact on the Group's
earnings. The acquisition of further prominent investors from the gaming
environment also supports our positive assessment that the company is on
the 'right track' to continue its successful course.

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Date (time) of completion: 11/05/2021 (15:25 pm)
Date (time) of first distribution: 11/05/2021 (16:15 pm)

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