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 Report (Anno)

Empfehlung: Buy

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

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

cost-savings.

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

reached

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:

EUR 2.10).

Die vollständige Analyse können Sie hier downloaden:

http://www.more-ir.de/d/21247.pdf

Kontakt für Rückfragen

Jörg Grunwald

Vorstand

GBC AG

Halderstraße 27

86150 Augsburg

0821 / 241133 0

research@gbc-ag.de

Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,11); Einen Katalog mölicher Interessenkonflikte finden Sie unter:

http://www.gbc-ag.de/de/Offenlegung.htm

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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