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 Note
Empfehlung: BUY
Kursziel: 5.15 EUR
Letzte Ratingänderung:
Analyst: Marcel Goldmann, Cosmin Filker

FY 2020 closed with significant revenue and earnings growth; extensive growth pipeline and KingsIsle M&A ensure further dynamic growth; optimisation of the media business and the advertising division's strong focus on digital advertising support the group's profitable growth path; confirmation of our price target & rating

Turnover and earnings development 2020

On 25 February 2021, Media and Games Invest plc (MGI) announced its preliminary business figures for the past financial year 2020. According to these figures, the MGI Group was able to continue its dynamic growth course in the past financial year with an increase in turnover of 67.1% to EUR140.22 million (previous year: EUR83.89 million). The high growth rate was primarily due to a fast-growing fourth quarter (revenue Q4 2019: EUR28.17 million vs. revenue Q4 2020: EUR48.69 million), which was the strongest in terms of revenue and earnings in the company's history to date.

On an EBITDA basis, an increase of around 71.0% to EUR26.55 million (previous year: EUR15.54 million) was achieved in the past financial year. EBITDA adjusted for one-off effects (e.g. special and restructuring costs from M&A transactions) increased by 60.8% to EUR29.10 million (previous year: EUR18.10 million) compared to the previous year. The adjusted EBITDA margin was 21.0%. The high margin level of the previous year (PY: 22.0%) was thus almost confirmed.

The significant increase in group revenue was driven in particular by the gaming segment. In this business segment, the company achieved a jump in turnover of 74.5% to EUR 75.20 million (previous year: EUR 43.10 million). In addition to positive effects from the 'Corona stay-at-home policy', game updates and expansions as well as M&A measures also contributed to this positive development. It should be mentioned here that the players acquired in the course of the ongoing Corona situation have considerably expanded the existing player base and, due to their traditionally high player loyalty, have also considerably increased the previous 'revenue base'.

Furthermore, the media division also made a significant contribution to the increase in Group turnover with a significant increase in turnover of 59.3% to EUR 65.0 million (previous year: EUR 40.80 million). In addition to revenue increases from organic growth, this business segment also benefited from the positive effects from completed M&A measures (e.g. acquisition of the main assets of Verve Wireless; acquisition of Platform 161, increase in shares in ReachHero). In our opinion, the organic growth of this business segment was primarily driven by the fact that the company's advertising division with its various digital advertising formats (incl. services) focused very strongly on customers from the fast-growing gaming and ecommerce sector (revenue share GBCe: approx. 80%).

Furthermore, the MGI Group has announced that after now well over 10 acquisitions in the media sector, this advertising division (Verve Group) is one of the few players in the digital programmatic advertising market that can offer a fully integrated programmatic advertising platform from the demand side to the supply side. Thus, in 2020, all media platforms were interconnected, resulting in significant synergies on the cost side combined with strong revenue synergies.

In addition, the company has reported that within this division, the focus and revenue distribution has shifted significantly from more personalized services such as influencers and affiliate business to programmatic software-as-a-service media and gaming infrastructure services. At this point, it is worth highlighting that programmatic advertising is considered by media experts to be one of the fastest growing segments in the digital advertising market. According to the company, Verve's Open Exchange is now one of the top 10 programmatic marketplaces worldwide.

Forecasts and evaluation

The preliminary figures published by MGI for the 2020 financial year are significantly above our previous forecasts and also above management's guidance. Consequently, we have moderately raised our previous estimates for this financial period in terms of revenue to EUR 140.22 million (previously: EUR 133.25 million) and EBITDA to EUR 26.55 million (previously: EUR 25.02 million).

In view of the very good company performance and the well-filled organic growth pipeline and the recent promising acquisition (KingsIsle) within the gaming division, we confirm our previous estimates. For the current financial year 2021, we expect revenues of EUR 173.55 million and EBITDA of EUR 47.42 million. For the following year 2022, we continue to expect revenues of EUR 199.88 million and an EBITDA of EUR 55.92 million.

Upon the implementation of some growth-specific projects within the gaming division at the beginning of the year, we also expect significant growth for the media division. In addition to the strong focus on the growth area of digital advertising, this division should also be able to benefit significantly from recovery effects in the 'post-Corona phase' in classic sectors (e.g. the tourism and hotel industry) due to a rebound in advertising business.

In addition, we believe that the advertising division has now reached a critical size in the recent past through organic and inorganic growth and increased synergy effects and has also significantly strengthened its market position to be able to grow significantly more profitably than before. In the future, this division should benefit from a significantly improved cost base and be able to increase its profitability disproportionately through the expected economies of scale.

Overall, we continue to see the MGI Group well positioned to continue to grow dynamically in both high-growth business areas through the good market positioning of the two divisions and to exploit considerable synergy effects between the two complementary business areas. The optimization measures carried out within the media business should have significantly strengthened this division and made it more efficient, thus enabling significantly more profitable growth in the future. In addition, the high level of cash on hand (cash and cash equivalents at the end of 2020: EUR 46.30 million) continues to offer the company the opportunity to further strengthen the group through targeted acquisitions and thereby increase the pace of growth once again.

Within the framework of our DCF valuation model, we have confirmed our previous price target of EUR 5.15 per share based on our retained estimates for the 2021 and 2022 financial years. In view of the current price level, we thus continue to assign a Buy rating and see significant price potential.

Die vollständige Analyse können Sie hier downloaden: http://www.more-ir.de/d/22196.pdf

Kontakt für Rückfragen
Jörg Grunwald
Vorstand
GBC AG
Halderstrasse 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
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Date (time) of completion of german version: 11/03/2021 (12:37 pm) Date (time) of first distribution of german version: 11/03/2021 (13:30 pm) Date (time) of completion of English version: 11/03/2021 (12:52 pm) Date (time) of first distribution of English version: 11/03/2021 (13:30 pm)

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