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
Anlass der Studie: Research Report (Anno)
Kursziel: 2.85 EUR
Kursziel auf Sicht von: 31.12.2021
Letzte Ratingänderung: -
Analyst: Dario Maugeri, Cosmin Filker
Dynamic growth and strong cash generation in FY2019
Positive impact of COVID-19 on Video Games Sales
Management successful in Optimizing the Value Chain of Games and Digital
Media and Games Invest plc (formerly Blockescence plc) completed a very
successful financial year in FY 2019 and got off to an excellent start in
Q1/2020. Net sales rose by 157.2% to 83.89m in FY2019 while EBITDA
increased by 79.8% to 15.54m in FY2019. Although acquisition costs were
incurred in the media segment, the successful integration of Trion Worlds
and WildTangent led to a substantial EBITDA-increase compared to FY 2018.
The management has implemented a very successful corporate strategy over
the last years. Since the acquisition of adspree through gamigo AG in 2016,
Mr Westermann (CEO) and Mr. Echt (CFO) have pursued a successful buy and
integrating strategy, optimizing the value chain between the two segments.
Key improvements are expected in user acquisition and advertising income.
This is in contrast to the higher risk development of new games which,
however, MGI continues to partly pursue. According to the management
statement, as not many competitors are pursuing this strategy, particularly
in the gaming sector, MGI may strike lucrative deals. Furthermore, new
technologies were implemented in 2019 (i.e. cloud database) with remarkable
Since March 2020, the COVID-19 pandemic has impacted MGI activities.
Although on the media side a balance has been visible between customers
pausing their budgets and others increasing their spending, the effect for
video games was a very positive one. As the population of many parts of
Europe and North America had to stay at home, gamigo experienced a strong
increase both in new registrations and in player activities. In March 2020
alone, monthly active users increased by 20% compared to January and
February 2020. Net sales in Q1/2020, therefore, doubled to EUR 26.55m (PY:
EUR 13.33m) while EBITDA grew by 40.3% to EUR 5.31m (PY: EUR 3.79m).
MGI's balance sheet has the typical structure of a technology company. Due
to completed acquisitions by the end of the FY 2019, intangible assets
EUR 233.21m (74.6% of total assets), including EUR 147.34m in goodwill and
EUR 72.67m in other intangible assets. In order to finance this growth,
various bonds were issued both at the MGI and gamigo level. At the end of
December 2019 bonds on balance amounted to EUR 63.99m for the whole group.
In 2020, the company completed the acquisitions of two further media
companies strengthening its digital marketing offer. We have noted that the
interest coverage rate decreased to 3.3 in Q1/20 compared to 4.5 at the end
of 2019. However, MGI has a strong cash generation as shown by the
operative cash flows in Q1/20 to EUR 5.87m (EUR 2.48m).
The uncertainty surrounding the COVID 19 pandemic and its impact on the
world economy remains difficult to predict. Although we remain prudent,
also due to the volatility of the video-game business, based on the
positive impact in Q1/20 and expected improvement in earning quality due to
synergies and initiated cost-cutting measures, we remain positive as to the
development of MGI. Hence, we have estimated a significant revenue growth
rate of around 30% which should be followed by an increase in
profitability. The acquisitions of Verve Group and Platform 161 in the
first half of 2020 have already laid a solid foundation for inorganic
growth. We have maintained our BUY rating and accounting 92.12m shares
(18.2m more due to gamigo minority acquisition and 3.9m more due to AppLift
purchase), we came out with the target price of EUR 2.85 per share (prior:
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Date (time) of completion: 22.07.2020 (11:20 am)
Date (time) of first distribution: 23.07.2020 (12:00 am)
-übermittelt durch die EQS Group AG.-
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