Original-Research: Media and Games Invest SE - von GBC AG

Einstufung von GBC AG zu Media and Games Invest SE

Unternehmen: Media and Games Invest SE
ISIN: MT0000580101

Anlass der Studie: Research Comment
Empfehlung: BUY
Kursziel: 9.40 EUR
Letzte Ratingänderung: 
Analyst: Marcel Goldmann, Cosmin Filker

Q1 2022: MGI continues to grow strongly; Significant earnings increase due
to scale, efficiency and M&A effects; Continuation of dynamic sales growth
expected; GBC estimates and target price confirmed
Business development Q1 2022
Media and Games Invest SE (MGI) published its Q1 business figures on 31 May
2022. According to these figures, the Group again achieved a significant
increase in revenue in the first quarter of the year compared to the same
quarter of the previous year by around 27.0% to EUR 65.87 million (Q1 2021:
EUR 51.93 million) and was thus able to continue its dynamic growth course.
In addition to inorganic growth impulses (e.g. through the Smaato
acquisition), the growth was primarily driven by organic growth effects
(+18.0%) within the MGI Demand Side and Supply Side business segments.
In addition, the Group announced that the number of software customers
increased significantly by 26.0% in the first quarter compared to the
previous quarter (Q4 2021). MGI has thus established a good basis for
further growth, as the business customers acquired typically increase their
business volume with the Group gradually over time.
In addition, the business volume with existing software customers with an
annual turnover of more than USD 100,000 was also significantly expanded in
the first quarter, which was also reflected in an increased business
expansion rate (so-called 'net dollar expansion rate') of 125.0%. Key
success factors for this included an extensive team, (first-party) games
content and a high level of expertise in the area of cross-channel
advertising campaigns for brands.
At the adjusted EBITDA level (Adj. EBITDA), the MGI Group achieved an
increase in earnings of around 30.0% to EUR 17.55 million (Q1 2021: EUR
13.48 million) compared to the same quarter of the previous year, despite
considerable personnel investments, and thus increased its profitability
slightly disproportionately. This is mainly due to economies of scale,
synergies and efficiency gains. In addition, positive earnings effects from
previously completed M&As also boosted Group profitability.
Significant increases were also achieved in terms of cash flow development.
Compared to the same quarter of the previous year, the operating cash flow
(after working capital changes) increased significantly by 44.8% to EUR
16.30 million (Q1 2021: EUR 11.26 million). In terms of value, there is
only a slight difference between adjusted EBITDA and operating cash flow,
which is an indication of the good quality of the company's results.
Forecasts and target price
In view of the very positive business performance in the first quarter and
the positive expectations for the rest of the year, MGI's management has
confirmed the corporate guidance (dated 28 April 2022) for the current
financial period, which was previously raised as a result of the
AxesInMotion acquisition. The company continues to expect consolidated
revenues in a range of EUR 295.00 to EUR 315.00 million and adjusted EBITDA
between EUR 83.00 to EUR 93.00 million. Based on this, the company expects
year-on-year revenue growth of between 17.0% and 25.0% and EBITDA growth of
between 17.0% and 31.0%.
Against this background of the strong company performance, the promising
growth strategy and the maintained company guidance, we confirm our
previous sales and earnings forecasts as well as our previous price target
of EUR 9.40 per share. Based on the current share price level, we continue
to give the rating 'Buy' and see significant upside potential.
Overall, we continue to see the MGI Group well positioned to grow very
dynamically and highly profitably in the future as an ad software platform
with its own games content. Through the even stronger transformation into
an ad-tech company, the company should succeed in continuing to 'keep up'
the current growth rate and additionally increase profitability. In
addition, MGI's extensive liquid funds (including credit lines), which most
recently amounted to around EUR 170.0 million (as of 31 March 2022), offer
the possibility of setting additional growth impulses through M&A
transactions at any time and further advancing the group's profitability.
It should be mentioned here that M&As are an important component of the
company's growth strategy.

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Date (time) of completion: 07/06/2022 (8:44 am)
Date (time) of first distribution: 07/06/2022 (10:00 am)

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