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 Note
Empfehlung: BUY
Kursziel: 8.00 EUR
Letzte Ratingänderung: 
Analyst: Marcel Goldmann, Cosmin Filker

MGI raises revenue and earnings forecast for the current financial year due
to very strong organic growth in H1; Planned Smaato acquisition opens up
additional revenue and earnings potential for H2; Increase of our previous
estimates and price target
Guidance increase for the 2021 business year
On 30 June 2021, Media and Games Invest SE (MGI) announced an increase in
its previous corporate guidance for the current financial year due to
strong organic growth of more than 30.0% in the first half of the year.
MGI expects to exceed its medium-term growth target of 25.0% to 30.0%
annual revenue growth per annum for the 2021 financial year and is now
targeting a growth rate more than twice as high as previously expected.
This also results in an expected significant increase in adjusted EBITDA
for 2021, with a significantly disproportionate increase in relation to the
planned revenue.
Specifically, the company now expects consolidated revenues in a range of
EUR 220.0 million to EUR 240.0 million and adjusted EBITDA of EUR 60.0
million to EUR 65.0 million for the current financial year 2021. In the
medium term, revenue growth of 25.0% to 30.0% p.a. and an EBITDA increase
of 66.0% to 72.0% p.a. are to be achieved.
The high organic growth achieved and the expected dynamic business
development are favoured in particular by the strongest organic growth
pipeline in the company's history already announced by MGI. In the games
segment, various new games were launched, platforms were expanded and
additional content was added for download. gamigo has, for example,
released Trove in South Korea and Trove on Nintendo Switch as well as the
closed beta of Skydome. The MGI Group has also successfully realised other
projects in its media business unit (Verve Group). For example, Verve
launched operations in Japan and Brazil with teams on the ground. In
addition, numerous partnerships have been concluded with publishers and
advertisers from the games sector, while Verve has introduced a promising
product for efficient user acquisition with the only on-device
anonymisation solution ATOM, which replaces the classic 'identifiers for
It should be emphasised that the new corporate guidance does not include
any further M&A transactions and, thus, also not the recently announced
acquisition of the digital advertising platform Smaato.
However, the Smaato acquisition announced on 21 June 2021 opens up
significant additional revenue and earnings potential (additional annual
revenue of between EUR 30.0m to EUR 40.0m with an EBIDA margin of around
30.0%) for the second half of 2021. In our view, the proposed Smaato
acquisition is transformative for MGI's captive advertising division (Verve
Group), as it would significantly increase the media unit's revenue volume,
profitability and reach (an additional 1.3bn Smaato end-users to then over
2.0bn end-users across the entire advertising division). In addition to
significant synergy potentials (e.g. through cross-selling effects between
the platforms of the media unit) within the media unit, the acquisition
would also, in our estimation, open up significant synergy potentials for
the games unit, especially in the area of new customer acquisition.
Furthermore, MGI announced on 01/07/2021 that it had signed an unsecured
overdraft facility of EUR 30.00 million with UniCredit Bank at an interest
rate of 3.875% per annum. The signed credit line increases the company's
flexibility in the area of working capital as well as for further M&A-
related financing needs. The guaranteed interest rate underlines the
company's continuously decreasing interest costs, which was already
demonstrated by the last follow-up bond (volume: EUR 150.0 million) at a
price of 102.0% above par on 18 June 2020, and at the same time
demonstrates the company's high creditworthiness. In our opinion, MGI has
thus been able to secure further financial leeway at favourable conditions
for general corporate financing as well as for opportunistic M&A
Forecasts and evaluation
In view of the very convincing company performance so far in the current
financial year and the increase in company guidance, we have also adjusted
our previous estimates for the current financial year and subsequent years
significantly upwards.
For the current financial year 2021, we now expect revenues of EUR 223.15
million (previously: EUR 202.30 million) and an EBITDA of EUR 58.71 million
(previously: EUR 52.81 million). For the following financial year 2022, we
calculate revenues of EUR 276.29 million (previously: EUR 255.10 million)
and EBITDA of EUR 76.60 million (previously: EUR 69.90 million). In the
following financial year 2023, turnover and EBITDA should increase again to
EUR 345.64 million (previously: EUR 319.39 million) and EUR 101.02 million
(previously: EUR 92.94 million), respectively.
Overall, we remain convinced that the MGI Group will be able to
successfully continue on its profitable growth path. The planned Smaato
takeover would significantly strengthen the media division and further
increase the critical size in both business segments (games, media) and
also enable additional organic growth. In addition, the company's high
liquidity position of currently around EUR 290.0 million (= GBCe pro forma
liquidity, i.e. cash position including bond inflows) means that it is also
well equipped to initiate further acquisitions as part of the M&A strategy
being pursued and thus to again significantly increase the pace of growth
and further expand its market positions.
Within the framework of our DCF valuation model, we have significantly
raised our previous price target from EUR 6.92 per share to EUR 8.00 per
share due to our increased estimates for the financial years 2021, 2022 and
2023 and the associated higher valuation starting level for the following
years. The 'roll-over effect' that occurred has also had the effect of
increasing the price target (price target related to the following
financial year 2022 instead of 2021). In view of the current share price
level, we continue to issue a 'buy' rating and see significant upside

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Date (time) of completion: 07/07/2021 (9:28 am)
Date (time) of first distribution: 07/07/2021 (10:30 am)

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