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 Note
Kursziel: 6.92 EUR
Analyst: Marcel Goldmann, Cosmin Filker
Capital increase for growth financing successfully carried out; continuation of dynamic growth course expected; oversubscribed capital measure opens up significant inorganic growth potential; price target lowered to EUR 6.92 (previously: EUR 7.35) due to the dilution effect that has occurred.
Successful capital increase for consistent implementation of the M&A pipeline
On 6 May 2021, Media and Games Invest plc (MGI) announced the closing of a cash capital increase. Thus, in accordance with the previous company announcement, the company has successfully completed the bookbuilding process of the direct share placement, and resolved to issue 20,930,232 new shares based on the authorisation granted at MGI's Annual General Meeting on 15 April 2021. The issue price of the new shares in the direct share placement was SEK 43 per share (equivalent to approximately EUR 4.30) and was determined in an accelerated bookbuilding process.
The direct share placement was heavily oversubscribed and generated high interest from both Swedish and international investors as well as existing shareholders. The company has therefore decided to increase the direct share placement to SEK 900.0 million (approx. EUR 89.0 million).
Upon completion of the transaction, the number of outstanding shares and voting rights will increase by 20,930,232 shares, from 128,749,748 to 149,679,980, as a result of the direct share placement, which represents a dilution of approximately 14.0% of the number of shares and voting rights to the company for the existing shareholders. In parallel, the share capital will increase by EUR 20,930,232 from EUR 128,749,748 to EUR 149,679,980.
In addition, as part of the capital measure, the company announced that both existing and new prominent investors participated in the capital measure. According to the company's website, for example, the following well-known 'long-only' investors have joined the shareholder group:
Top 3 new investors shareholding in % also invested in, among others:
Janus Henderson Global Investors (UK) 5.50% Embracer, Tencent, Activision Blizzard
Didner & Gerge Fonder (Sweden) 0.50% Embracer
BMO Global Asset Manager (UK) 0.30% Tencent
In addition, the following investors, among others, further increased their shareholding:
Top 3 existing investors shareholding in %* also invested in, among others:
Oaktree Capital (US) 9.10% n/a.
Skandia Fonder (Sweden) 1.10% Embracer, Evolution Gaming Group, Stillfront,EG7, MTG
Finlandia Group (Nordics) 0.70% n/a.
Following the announcement of the successful completion of the KingsIsle acquisition in early February 2021, MGI intends to continue its growth through the acquisition of further complementary games and media companies or assets, as well as investing in further organic growth.
According to the company's own statements, it has an extensive pipeline of potential acquisition targets within the games and media segments, many of which could potentially be realisable candidates in the short term. With the inflow of capital from the capital increase, the MGI Group intends to strengthen its financial position in order to take advantage of these acquisition opportunities in the short term, if necessary.
Forecasts and evaluation
As a result of the completed capital measure in conjunction with a reported cash balance of EUR 51.70m at the end of the first quarter of 2021, MGI has financial resources of around EUR 141.0m in our view. With this high financial strength, we believe the company should now be in a position to acquire two to three target companies from the M&A list (top 5) communicated by MGI.
This would result in considerable growth and earnings potential as well as extensive synergy effects within the group. It should be mentioned here that the MGI management has already announced two to three acquisitions for the current financial year. Since the completed capital measure has no influence on our previous forecasts, which we had adjusted upwards with the recently announced Q1 business figures, we are leaving our previous estimates unaffected.
Should the MGI Group carry out further M&A transactions in the current financial year following the acquisition of KingsIsle and LKQD, we will adjust our existing forecasts and valuation accordingly. Due to the dilution effect associated with the capital measure, we have determined a new price target of EUR 6.92 per share and, thus, moderately lowered our previous price target (EUR 7.35 per share). In view of the current price level, we continue to assign a Buy rating and see significant price potential.
Overall, we are convinced that the company will be able to continue its successful growth strategy in the future and significantly increase turnover and earnings. The acquisitions planned by the management for the current financial year 2021 should increase the growth momentum to a much higher level. This should also have a positive impact on the Group's earnings. The acquisition of further prominent investors from the gaming environment also supports our positive assessment that the company is on the 'right track' to continue its successful course.
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Date (time) of completion: 11/05/2021 (15:25 pm)
Date (time) of first distribution: 11/05/2021 (16:15 pm)
übermittelt durch die EQS Group AG.
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