Original-Research: Media and Games Invest plc (von GBC AG):

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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: Management Interview
Letzte Ratingänderung:
Analyst: Marcel Goldmann, Cosmin Filker

Media and Games Invest (MGI) is a fast and profitable growing company in
the digital media and games sector. The company combines organic growth
with value-added acquisitions. In the past six years, the MGI Group has
successfully acquired more than 30 companies and assets.

A few weeks ago, MGI announced the successful completion of an extensive
private placement (gross volume: approx. EUR 29.0 million) within the
framework of a dual listing on the Stockholm Stock Exchange Nasdaq Nordic
(special segment Nasdaq First North Premier Growth Market). Against this
background, we took the opportunity to interview CFO Paul Echt about this
strategic move.

GBC AG: Mr. Echt, what were the reasons for a dual listing on the Stockholm
Stock Exchange Nasdaq Nordic and what effects do you expect in terms of
trading (liquidity) and visibility of your share? Can the first positive
effects already be seen now?

Mr Echt: The answer is a resounding yes. If we fade out the first trading
week after the listing, due to exceptionally high, transaction-related
volumes of up to 5 million euros per day, and only look at the turnover
since the beginning of the second trading week, we see that the volume
averages around 1.0 million euros per day, while the trading volume for the
whole of September (before the dual listing) was still around 163,000 euros
on average. This is due to the fact that a strong gaming cluster has
developed on Nasdaq Stockholm in recent years. This includes successful
companies such as Embracer, Stillfront and Paradox, whose share prices have
risen between 230% and 1,117% in the past three years. Gaming is one of the
hottest topics on the capital market there and many investors are very
familiar with the business models and strong growth forecasts of the
market. This is true for institutional investors as well as private
investors, and our capital increase was accordingly oversubscribed almost
three times. But also internationally, such as in the UK or the USA, the
perception of MGI is increasing significantly due to the listing on Nasdaq
Nordic. This is because many investors have recognised Nasdaq Nordic as an
international marketplace for successful gaming companies.

GBC AG: The private placement raised approximately EUR 29 million in
investor funds. According to media reports, for the first time very well-
known investors from the gaming sector also participated in the capital
measure. Are further equity-based capital measures possible in the future
to further increase the company's high 'growth rate'?

Mr. Echt: Due to the dual listing on the Nasdaq, which was implemented in
parallel, we were able to attract a number of tier-one and long only
investors, as the topic of gaming is, as already mentioned, very well known
and popular on the Swedish as well as the international capital market.
Among the subscribers are also investors who have been on board since the
capital increase of 2019, but who have now significantly expanded their
holdings, which we regard as a very strong sign of confidence. No further
equity measures are currently planned. In general, however, we will not
rule out this option for the future if it makes sense and, on balance, adds
value for shareholders.

GBC AG: Your group generally follows a growth-oriented corporate strategy.
Please briefly explain your current strategic focus and what role the most
recent capital measure plays in your growth strategy?

Mr. Echt: We are a growth company and are investing accordingly to become
as large as possible as quickly as possible - without losing sight of
profitability - and are therefore focusing on growth through M&A in
addition to organic growth. In the first years between 2014 and 2017 we
have almost exclusively focused on inorganic growth. Especially in the very
dynamic and competitive gaming market, it is important to reach a critical
mass in order to benefit from economies of scale. Multiplayer games, as the
name suggests, thrive on the fact that they are played by tens of thousands
of players simultaneously. This increases the fun of the game, attracts
more players and also extends the life span of each player. In addition,
you can also publish new games more successfully if you do this on a
platform where over five million players are active every month. As already
mentioned, it is important to us that profitability is not lost and that we
also show a positive result at the end of the day. We have managed this
balancing act very well in recent years by acquiring companies and assets
that have functioning games and player communities and, after successful
integration into our platform, can continue to operate much more profitably
through synergy effects. In the same way, we will also use a large portion
of the proceeds from the current capital increase, thus creating further
substantial value for shareholders.

GBC AG: In August MGI announced convincing half-year figures for the first
six months of the 2020 financial year and at the same time raised its
previous corporate guidance. In the course of their business development so
far, the company even benefited from the Corona crisis, especially thanks
to its strong traditional business (online games). With its strong focus on
gaming and its complementary media business, will the Group also be among
the long-term beneficiaries of the corona problem?

Mr Echt: Again, a resounding yes. The containment measures in spring have
led to a significant increase in new players of up to 75% within our games.
There were many who asked us whether this was a one-off effect that did not
have a long-term impact. However, initial figures indicate a long-term
effect, as a large proportion of these players are still active today. This
is because the core of our game portfolio consists of multiplayer games.
These games are mostly free and, as already mentioned, are played by many
thousands of players at the same time. In the game the players then join
together and form guilds or clans and take part in competitions, through
which they improve their character's skills, and can also individualise
their character by purchasing so-called in-game items. The games are
therefore also a social platform in a certain way and have a very high
customer loyalty. Some of our games are over 10 years old and generate more
than 50% of their sales with players who have been in the game for more
than 5 years. So if a user decides to play one of our games, the
probability is correspondingly high that they will do so over a very long
period of time.

GBC AG: What can investors and investors expect from the MGI Group in the
current business year (outlook)?

Mr. Echt: The third quarter went well, despite the hot summer months, and
we have also made a good start in the fourth quarter. We are relaxed about
possible tightening of containment measures from an economic perspective,
as the gaming industry in general is very crisis-resistant, both in the
case of Corona and in the event of economic downturns. In the media
segment, we have learned from the experience of the spring. Here it became
clear that customers from the offline sector have reduced their budgets
considerably as a result of Corona, while customers from the online sector
have increased their budgets. Thanks to our customer base, which is
strongly focused on the online sector, we were able to come through the
crisis very well in the spring compared to many of our competitors and
continue to grow. We have taken advantage of this aspect in recent months
to focus our customer base even more strongly on the online sector and have
been able to win over some major customers and partners, such as Zynga from
the gaming industry.

GBC AG: GBC: Where do you see the MGI Group in the next three to five
years, especially in terms of business volume, major business areas and
business regions?

Mr. Echt: We want to continue to grow at an annual rate of 25%-30% in sales
over this period and achieve an EBITDA margin of 25-30%. In order to
achieve this, we will focus more on increasing the share of our organic
growth in the future. In concrete terms, this means that we will launch
more games per year, increasingly sublicense our own game IPs to partners
outside our core markets, such as Asia, and further expand our mobile
gaming business. This last point in particular holds great potential, as we
have a clear competitive advantage in user acquisition through the
development of the Media segment. However, it is clear that, in addition to
our focus on organic growth, we also want to continue to grow via M&A.

GBC: Mr Echt, thank you very much for the interview.

CONCLUSION GBC: Overall, we believe that MGI is well positioned to continue
its dynamic growth course in both growth areas gaming and media
successfully in the future. The newly acquired prominent investors from the
gaming sector also support our positive assessment of the company and the
business prospects. The financial resources raised by the company within
the scope of the dual listing form a good foundation for further growth and
also open up the opportunity to significantly increase the pace of growth
once again through targeted M&As.

Die vollständige Analyse können Sie hier downloaden:
http://www.more-ir.de/d/21775.pdf

Kontakt für Rückfragen
Jörg Grunwald
Vorstand
GBC AG
Halderstrasse 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR. Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,11); Einen Katalog möglicher Interessenkonflikte finden Sie unter:
http://www.gbc-ag.de/de/Offenlegung.htm
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Date (time) of completion of german version: 29/10/2020 (10:09 am)
Date (time) of first distribution of german version: 29/10/2020 (11:00 am)
Date (time) of completion of English version: 29/10/2020 (10:11 am)
Date (time) of first distribution of English version: 29/10/2020 (11:00 am)

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Quelle: dpa-AFX