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Embracer Group

Embracer Group

Game developer and publisher focusing on the PC and console market

Embracer Group acquires, develops and publishes PC and console games for the global gaming market. Its core business model consists of acquiring established gaming brands and gradually improving them. Much of Embracer Group’s soul stems from entrepreneur, founder and CEO Lars Wingefors, who at the age of 16 founded Nordic Games, which we today associate with Embracer Group. The game changer came in 2013 when most of today’s brand portfolio was acquired from THQ Inc’s insolvency. At the start of 2018, the company acquired Koch Media, which focuses on game development and gives Embracer Group a larger publishing business.

A large part of the IP portfolio is still not generating any income, but the pipeline of game launches is strong, including a few AAA titles. Together with a strong management with a clear M&A agenda, Embracer Group is well suited for future value-adding acquisitions, which could mean securing more IPs and portfolio expansion. The acquisition of Koch Media further adds new distribution/publishing channels, an opportunity to reach further and wider with the current portfolio and expected pipeline, aligning them for additional growth.

Despite Embracer Group’s broad portfolio, there are risks associated with larger title releases as they have a relatively large impact on sales right after launch. Moreover, disappointing releases or reviews could dent end-customer enthusiasm and hurt the company's finances, especially during the launch period. Delays in planned and ongoing gaming projects could adversely affect the group’s profitability. Acquiring established but temporarily underperforming gaming brands and gradually improving them increases the potential risk of performing below market expectations.

SEKm 2020 2021e 2022e
Sales 8589 10960 12039
Sales growth (%) 63,6 27,6 9,8
EBITDA 3563 4518 5021
EBITDA margin (%) 41,5 41,2 41,7
EBIT adj 2494 3377 3871
EBIT adj margin (%) 29 30,8 32,2
Pretax profit 167 765 1046
EPS rep 0,09 1,33 1,82
EPS growth (%) -90,1 1386,2 36,7
EPS adj 5,67 7,44 8,43
DPS 0 0 0
EV/EBITDA (x) 22 17 15
EV/EBIT adj (x) 31,5 22,7 19,5
P/E (x) 2213,7 149 109
P/E adj (x) 35 26,7 23,6
EV/sales (x) 9,1 7 6,3
FCF yield (%) -2,6 2,1 1,3
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -1,7 -1,7 -1,8
N/A N/A N/A
SEKm 2020 2021e 2022e
Sales 8589 10960 12039
COGS -3589 -4502 -4851
Gross profit 5000 6458 7188
Other operating items -1438 -1940 -2167
EBITDA 3563 4518 5021
Depreciation on tangibles 0 0 0
Depreciation on intangibles -3438 -3733 -3956
EBITA 124 785 1066
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 124 785 1066
Other financial items 0 0 0
Net financial items 43 -20 -20
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 167 765 1046
Tax -129 -199 -272
Net profit 38 566 774
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 38 566 774
EPS 0,09 1,33 1,82
EPS Adj 5,67 7,44 8,43
Total extraordinary items after tax -2369,7 -2592 -2805
Tax rate (%) -77,2 -26 -26
Gross margin (%) 58,2 58,9 59,7
EBITDA margin (%) 41,5 41,2 41,7
EBITA margin (%) 1,4 7,2 8,9
EBIT margin (%) 1,4 7,2 8,9
Pretax margin (%) 1,9 7 8,7
Net margin (%) 0,4 5,2 6,4
Growth rates Y/Y 2020 2021 2022
Sales growth (%) 63,6 27,6 9,8
EBITDA growth (%) 95,6 26,8 11,1
EBIT growth (%) -64 531,7 35,7
Net profit growth (%) -86,5 1386,2 36,7
EPS growth (%) -90,1 1386,2 36,7
Profitability 2020 2021 2022
ROE (%) 0,3 2,6 3,3
ROE Adj (%) 17,2 14,5 15,2
ROCE (%) 1,6 3,5 4,4
ROCE Adj(%) 17,5 14,9 15,9
ROIC (%) 0,3 3,9 5,2
ROIC Adj (%) 5,4 16,9 19
Adj earnings numbers 2020 2021 2022
EBITDA Adj 5932 7110 7826
EBITDA Adj margin (%) 69,1 64,9 65
EBITA Adj 2494 3377 3871
EBITA Adj margin (%) 29 30,8 32,2
EBIT Adj 2494 3377 3871
EBIT Adj margin (%) 29 30,8 32,2
Pretax profit Adj 2537 3357 3851
Net profit Adj 2408 3158 3579
Net profit to shareholders Adj 2408 3158 3579
Net Adj margin (%) 28 28,8 29,7
N/A N/A N/A
SEKm 2020 2021e 2022e
EBITDA 3563 4518 5021
Net financial items 43 -20 -20
Paid tax -129 -199 -272
Non-cash items 0 0 0
Cash flow before change in WC 3476 4299 4729
Change in WC 1124 530 124
Operating cash flow 4600 4829 4853
CAPEX tangible fixed assets -86 -110 -120
CAPEX intangible fixed assets -2577 -2959 -3612
Acquisitions and disposals -4103 0 0
Free cash flow -2165 1760 1121
Dividend paid 0 0 0
Share issues and buybacks 6000 0 0
Other non cash items 1203 0 0
Decrease in net IB debt 5238 1760 1121
Balance Sheet (SEKm) 2020 2021 2022
Goodwill 10512 12512 12512
Indefinite intangible assets 0 0 0
Definite intangible assets 4559 3786 3442
Tangible fixed assets 284 393 514
Other fixed assets 196 196 196
Fixed assets 15551 16887 16664
Inventories 472 603 662
Receivables 1975 2521 2769
Other current assets 0 0 0
Cash and liquid assets 6829 8589 9710
Total assets 24827 28600 29805
Shareholders equity 20531 23098 23872
Minority 0 0 0
Total equity 20531 23098 23872
Long-term debt 918 918 918
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 0 0 0
Short-term debt 0 0 0
Accounts payable 3178 4384 4816
Other current liabilities 200 200 200
Total liabilities and equity 24827 28600 29805
Net IB debt -6107 -7867 -8988
Net IB debt excl. pension debt -6107 -7867 -8988
Capital invested 14425 15231 14883
Working capital -930 -1460 -1584
EV breakdown 2020 2021 2022
Market cap. diluted (m) 84352 84352 84352
Net IB debt Adj -5910 -7671 -8792
Market value of minority 0 0 0
Reversal of shares and participations 0 0 0
Reversal of conv. debt assumed equity 0 0 0
EV 78442 76681 75560
Capital efficiency (%) 2020 2021 2022
Total assets turnover (%) 49,5 41 41,2
Capital invested turnover (%) 82 73,9 80
Capital employed turnover (%) 57,7 48,2 49,3
Inventories / sales (%) 5 4,9 5,3
Customer advances / sales (%) 0 0 0
Payables / sales (%) 27,7 34,5 38,2
Working capital / sales (%) -3,1 -10,9 -12,6
Financial risk and debt service 2020 2021 2022
Net debt / equity (%) -29,7 -34,1 -37,7
Net debt / market cap (%) -10,9 -9,3 -10,7
Equity ratio (%) 82,7 80,8 80,1
Net IB debt adj. / equity (%) -28,8 -33,2 -36,8
Current ratio (%) 274,6 255,5 262
EBITDA / net interest (%) -8362,7 22588,9 25106,4
Net IB debt / EBITDA (%) -171,4 -174,1 -179
Interest cover (%) 332,5 3161,1 4283,1
N/A N/A N/A
SEKm 2020 2021e 2022e
Shares outstanding adj. 424 424 424
Fully diluted shares Adj 424 424 424
EPS 0,09 1,33 1,82
Dividend per share Adj 0 0 0
EPS Adj 5,67 7,44 8,43
BVPS 48,39 54,44 56,26
BVPS Adj 12,87 16,03 18,66
Net IB debt / share -14,4 -18,5 -21,2
Share price 132,01 198,8 198,8
Market cap. (m) 56014 84352 84352
Valuation 2020 2021 2022
P/E 2213,7 149 109
EV/sales 9,13 7 6,28
EV/EBITDA 22 17 15
EV/EBITA 631 97,6 70,9
EV/EBIT 631 97,6 70,9
Dividend yield (%) 0 0 0
FCF yield (%) -2,6 2,1 1,3
P/BVPS 4,11 3,65 3,53
P/BVPS Adj 15,45 12,4 10,65
P/E Adj 35 26,7 23,6
EV/EBITDA Adj 13,2 10,8 9,7
EV/EBITA Adj 31,5 22,7 19,5
EV/EBIT Adj 31,5 22,7 19,5
EV/cap. employed 3,7 3,2 3
Investment ratios 2020 2021 2022
Capex / sales 31 28 31
Capex / depreciation 77,4 82,2 94,4
Capex tangibles / tangible fixed assets 30,3 27,9 23,4
Capex intangibles / definite intangibles 56,5 78,2 104,9
Depreciation on intangibles / definite intangibles 75,4 98,6 114,9
Depreciation on tangibles / tangibles 0 0 0
N/A N/A N/A

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Main shareholders - Embracer Group

Main shareholders Share capital % Voting shares % Verified
Lars Wingefors AB 30.9 % 50.6 % 31 Dec 2020
S3D Media Inc 9.9 % 13.8 % 31 Dec 2020
Swedbank Robur Fonder 6.5 % 3.8 % 31 Dec 2020
Handelsbanken Fonder 4.1 % 2.4 % 31 Dec 2020
Canada Pension Plan Investment Board (CPP) 3.1 % 1.8 % 6 Nov 2020
Didner & Gerge Fonder 2.6 % 1.5 % 31 Dec 2020
ODIN Fonder 2.0 % 1.2 % 31 Dec 2020
AMF Pension & Fonder 1.7 % 1.0 % 31 Dec 2020
Ken Go 1.7 % 0.9 % 8 Sep 2020
Avanza Pension 1.4 % 0.8 % 31 Dec 2020
Source: Holdings by Modular Finance AB

Insider list - Embracer Group

Name Quantity Code Date
Lars Wingefors +25 219 472 BUY 10 Dec 2020
Lars Wingefors +9 752 199 BUY 10 Dec 2020
Erik Stenberg -4 223 172 SELL 10 Dec 2020
Klemens Kreuzer - 632 352 SELL 10 Dec 2020
Erik Stenberg -14 677 800 SELL 10 Dec 2020
Lars Wingefors +6 652 701 BUY 10 Dec 2020
Klemens Kreuzer -2 189 911 SELL 10 Dec 2020
Lars Wingefors -9 572 199 SELL 10 Dec 2020
Lars Wingefors +35 689 907 Received loan 14 Oct 2020
Lars Wingefors -9 084 703 SELL 12 Oct 2020

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