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
Anlass der Studie: Research Note
Kursziel: 9.40 EUR
Analyst: Marcel Goldmann, Cosmin Filker
AxesInMotion acquisition significantly strengthens ad software platform
with high-quality first-party data; Acquired company should significantly
boost future company performance due to multiple synergy potentials;
Forecasts and price target raised; Buy rating
Acquisition of the AxesInMotion
Media and Games Invest SE (MGI) recently announced an agreement to fully
acquire Spanish mobile games developer AxesInMotion S.L. (AxesInMotion).
The acquired company was founded in 2014 and is based in Seville, Spain.
AxesInMotion is one of the leading free-to-play mobile game developers,
with a strong portfolio of high-definition racing games that have already
generated over 700 million downloads worldwide.
The company has succeeded in building a portfolio of high-quality racing
games over the past few years, with 87.0% of revenues generated through in-
game advertising. The developer's flagship titles include 'Car Driving
Simulator', 'Mega Ramps' and 'Extreme SUV Driving Simulator'. In addition,
the company has two new titles in the pipeline, one of which is already
almost fully developed. In terms of geographic revenue distribution, the
USA was the most important single market for the company with an estimated
revenue share of approximately 33.0% at last count.
With normalised IFRS revenue of EUR 7.90 million and adjusted EBITDA (adj.
EBITDA) of EUR 5.00 million (adj. EBITDA margin of 64.0%) in 2021, combined
with an organic growth rate of 36.0% over the past three years,
AxesInMotion is well positioned for further growth opportunities within the
MGI Group, according to the company. Based on management assumptions and
taking into account the (expected) medium-term synergies with MGI,
AxesInMotion would have contributed an additional EBITDA of EUR 17.0
million on a pro-forma basis (2021) and provided for an increase in
adjusted EBITDA (adj. EBITDA) of more than 20.0%, according to the company.
MGI has agreed with the AxesInMotion owners on a fixed purchase price of
EUR 55.0 million plus a performance-based purchase price component (earn
out) of up to EUR 110.0 million. To finance the acquisition, the MGI Group
has carried out a capital increase with a volume of around EUR 30.0 million
and also plans to draw on its own liquid funds (cash and cash flow). The
transaction is expected to be completed in May 2022.
According to the company, taking into account the earn-out component, the
EV/EBITDA multiple from the acquisition - depending on the realised revenue
and EBITDA synergies until 2024 - will be in a range of 6.8x to 9.1x.
Against the backdrop of the potential multiples to be incurred or paid, we
rate the purchase price as favourable.
Forecast adjustment with consideration of the inorganic effect
In parallel to the announced acquisition, MGI has slightly increased its
previous corporate guidance for the current financial year 2022, also based
on the expected positive effects from the acquisition. The company now
expects revenues in a range of EUR 295.0 million to EUR 315.0 million
(previously: EUR 290.0 million to EUR 310.0 million) and adjusted EBITDA of
EUR 83.0 million to EUR 93.0 million (previously: adjusted EBITDA of EUR
80.0 million to EUR 90.0 million).
For us, the highly synergistic acquisition represents a good strategic move
for the MGI Group, as it is a promising addition to the existing games
portfolio and at the same time significantly supports the pursued growth
strategy (MGI's Vision 2025) through the acquisition of mobile game
content. The acquisition of AxesInMotion also reflects the MGI Group's new
investment focus following the company's transformation into an ad software
platform with first-party data from game content.
The acquisition of AxesInMotion and the expected positive effects
(including synergies) associated with it should have a significantly
positive impact on the future revenue and earnings situation of the MGI
Group. In this context, we assume that significant revenue synergies can be
realised in particular through the integration of the company's mobile
games into MGI's ad software platform. These should result primarily from
more efficient and extensive user acquisition and better monetisation of
the in-game advertising space.
In view of the very promising acquisition and the positive effects
(including synergy effects) we expect from the Group integration, we have
adjusted our previous revenue and earnings forecasts for the current
financial year 2022 and also for subsequent years upwards.
For the current financial year, we now expect revenues of EUR 307.22
million (previously: EUR 302.22 million) and EBITDA of EUR 87.52 million
(previously: EUR 84.52 million). For the subsequent years 2023 and 2024, we
calculate revenue growth to EUR 377.76 million (previously: EUR 364.76
million) and EUR 473.08 million (previously: EUR 455.08 million),
respectively. In parallel, we expect EBITDA to increase to EUR 116.94
million (previously: EUR 108.03 million) and EUR 147.03 million
(previously: EUR 134.43 million).
Overall, we continue to see the MGI Group well positioned to grow very
dynamically and highly profitably in the future as an ad tech company with
its own gaming activities (access to 'first party data' and advertising
space of gaming assets). The combination and close integration of
synergetic media and gaming business activities should continue to
significantly boost their profitable growth to date. In addition, the
currently available liquid funds (GBCe: approximately EUR 100 million)
offer the company the possibility at any time of further strengthening the
group through planned M&A transactions and, at the same time, to further
increase their earning power and pace of growth.
Within the framework of our DCF valuation model, we have raised our
previous price target to EUR 9.40 (previously: EUR 9.20 per share) due to
our increased estimates for the current financial year and the following
years. The increase in our previous WACC due to a higher risk-free interest
rate (to 0.40%, from 0.25% previously) and the dilution effect due to the
completed capital increase to finance the M&A transaction have counteracted
an even stronger price target increase. In view of the current share price
level, we therefore continue to assign a 'Buy' rating and see significant
Die vollständige Analyse können Sie hier downloaden:
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Date (time) of completion: 05/05/2022 (9:13 am)
Date (time) of first distribution: 05/05/2022 (10:00 am)
-übermittelt durch die EQS Group AG.-
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