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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 2019 2020e 2021e
Sales 5249 8589 10960
Sales growth (%) -8,8 63,6 27,6
EBITDA 1821 3563 4518
EBITDA margin (%) 34,7 41,5 41,2
EBIT adj 1033 2494 3377
EBIT adj margin (%) 19,7 29 30,8
Pretax profit 409 167 765
EPS rep 0,91 0,09 1,33
EPS growth (%) -78,5 -90,1 1386,2
EPS adj 3,11 5,67 7,44
DPS 0 0 0
EV/EBITDA (x) 11,8 19,3 14,8
EV/EBIT adj (x) 20,7 27,6 19,9
P/E (x) 78 1961,5 132
P/E adj (x) 22,8 31 23,7
EV/sales (x) 4,1 8 6,1
FCF yield (%) -8,4 -2,9 2,4
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -0,5 -1,7 -1,7
N/A N/A N/A
SEKm 2019 2020e 2021e
Sales 5249 8589 10960
COGS -2576 -3589 -4502
Gross profit 2673 5000 6458
Other operating items -852 -1438 -1940
EBITDA 1821 3563 4518
Depreciation on tangibles 0 0 0
Depreciation on intangibles -1476 -3438 -3733
EBITA 345 124 785
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 345 124 785
Other financial items 0 0 0
Net financial items 63 43 -20
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 409 167 765
Tax -126 -129 -199
Net profit 283 38 566
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 283 38 566
EPS 0,91 0,09 1,33
EPS Adj 3,11 5,67 7,44
Total extraordinary items after tax -687,4 -2369,7 -2592
Tax rate (%) -30,7 -77,2 -26
Gross margin (%) 50,9 58,2 58,9
EBITDA margin (%) 34,7 41,5 41,2
EBITA margin (%) 6,6 1,4 7,2
EBIT margin (%) 6,6 1,4 7,2
Pretax margin (%) 7,8 1,9 7
Net margin (%) 5,4 0,4 5,2
Growth rates Y/Y 2019 2020 2021
Sales growth (%) -8,8 63,6 27,6
EBITDA growth (%) 14,4 95,6 26,8
EBIT growth (%) -39,9 -64 531,7
Net profit growth (%) -28,6 -86,5 1386,2
EPS growth (%) -78,5 -90,1 1386,2
Profitability 2019 2020 2021
ROE (%) 4,1 0,3 2,6
ROE Adj (%) 14,1 17,2 14,5
ROCE (%) 5,8 1,6 3,5
ROCE Adj(%) 14,6 17,5 14,9
ROIC (%) 4,5 0,3 3,9
ROIC Adj (%) 13,4 5,4 16,9
Adj earnings numbers 2019 2020 2021
EBITDA Adj 2509 5932 7110
EBITDA Adj margin (%) 47,8 69,1 64,9
EBITA Adj 1033 2494 3377
EBITA Adj margin (%) 19,7 29 30,8
EBIT Adj 1033 2494 3377
EBIT Adj margin (%) 19,7 29 30,8
Pretax profit Adj 1096 2537 3357
Net profit Adj 971 2408 3158
Net profit to shareholders Adj 971 2408 3158
Net Adj margin (%) 18,5 28 28,8
N/A N/A N/A
SEKm 2019 2020e 2021e
EBITDA 1821 3563 4518
Net financial items 63 43 -20
Paid tax -126 -129 -199
Non-cash items 0 0 0
Cash flow before change in WC 1759 3476 4299
Change in WC -84 1124 530
Operating cash flow 1675 4600 4829
CAPEX tangible fixed assets -42 -86 -110
CAPEX intangible fixed assets -1653 -2577 -2959
Acquisitions and disposals -1840 -4103 0
Free cash flow -1861 -2165 1760
Dividend paid 0 0 0
Share issues and buybacks 0 6000 0
Other non cash items 523 1203 0
Decrease in net IB debt -1338 5238 1760
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 1412 10512 12512
Indefinite intangible assets 0 0 0
Definite intangible assets 4521 4559 3786
Tangible fixed assets 198 284 393
Other fixed assets 196 196 196
Fixed assets 6327 15551 16887
Inventories 394 472 603
Receivables 1575 1975 2521
Other current assets 0 0 0
Cash and liquid assets 1591 6829 8589
Total assets 9886 24827 28600
Shareholders equity 7393 20531 23098
Minority 0 0 0
Total equity 7393 20531 23098
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 1575 3178 4384
Other current liabilities 0 200 200
Total liabilities and equity 9886 24827 28600
Net IB debt -869 -6107 -7867
Net IB debt excl. pension debt -869 -6107 -7867
Capital invested 6524 14425 15231
Working capital 394 -930 -1460
EV breakdown 2019 2020 2021
Market cap. diluted (m) 22083 74742 74742
Net IB debt Adj -673 -5910 -7671
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 21410 68831 67071
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 56,8 49,5 41
Capital invested turnover (%) 98,2 82 73,9
Capital employed turnover (%) 67,3 57,7 48,2
Inventories / sales (%) 6,8 5 4,9
Customer advances / sales (%) 0 0 0
Payables / sales (%) 27,5 27,7 34,5
Working capital / sales (%) 6,7 -3,1 -10,9
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -11,8 -29,7 -34,1
Net debt / market cap (%) -3,9 -8,2 -10,5
Equity ratio (%) 74,8 82,7 80,8
Net IB debt adj. / equity (%) -9,1 -28,8 -33,2
Current ratio (%) 226 274,6 255,5
EBITDA / net interest (%) -2872,7 -8362,7 22588,9
Net IB debt / EBITDA (%) -47,7 -171,4 -174,1
Interest cover (%) 974,9 332,5 3161,1
N/A N/A N/A
SEKm 2019 2020e 2021e
Shares outstanding adj. 312 424 424
Fully diluted shares Adj 312 424 424
EPS 0,91 0,09 1,33
Dividend per share Adj 0 0 0
EPS Adj 3,11 5,67 7,44
BVPS 23,7 48,39 54,44
BVPS Adj 4,68 12,87 16,03
Net IB debt / share -2,8 -14,4 -18,5
Share price 71,46 176,15 176,15
Market cap. (m) 22297 74742 74742
Valuation 2019 2020 2021
P/E 78 1961,5 132
EV/sales 4,08 8,01 6,12
EV/EBITDA 11,8 19,3 14,8
EV/EBITA 62 553,7 85,4
EV/EBIT 62 553,7 85,4
Dividend yield (%) 0 0 0
FCF yield (%) -8,4 -2,9 2,4
P/BVPS 2,99 3,64 3,24
P/BVPS Adj 15,12 13,69 10,99
P/E Adj 22,8 31 23,7
EV/EBITDA Adj 8,5 11,6 9,4
EV/EBITA Adj 20,7 27,6 19,9
EV/EBIT Adj 20,7 27,6 19,9
EV/cap. employed 2,6 3,2 2,8
Investment ratios 2019 2020 2021
Capex / sales 32,3 31 28
Capex / depreciation 114,9 77,4 82,2
Capex tangibles / tangible fixed assets 21,4 30,3 27,9
Capex intangibles / definite intangibles 36,6 56,5 78,2
Depreciation on intangibles / definite intangibles 32,7 75,4 98,6
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 23.5 % 38.0 % 31 Oct 2020
S3D Media Inc 9.9 % 13.8 % 31 Oct 2020
Erik Stenberg 5.6 % 8.5 % 31 Oct 2020
Swedbank Robur Fonder 6.4 % 3.7 % 31 Oct 2020
CMB Holding AB 1.9 % 2.9 % 31 Oct 2020
Handelsbanken Fonder 4.6 % 2.7 % 31 Oct 2020
Canada Pension Plan Investment Board (CPP) 3.1 % 1.8 % 6 Nov 2020
Didner & Gerge Fonder 2.7 % 1.6 % 31 Oct 2020
ODIN Fonder 2.0 % 1.2 % 31 Oct 2020
Ken Go 1.7 % 0.9 % 8 Sep 2020
Source: Holdings by Modular Finance AB

Insider list - Embracer Group

Name Quantity Code Date
Lars Wingefors +35 689 907 Received loan 14 Oct 2020
Lars Wingefors -9 084 703 SELL 12 Oct 2020
Lars Wingefors -35 689 907 Received loan 7 Oct 2020
Lars Wingefors +18 500 000 Received loan 17 Apr 2020
Lars Wingefors -18 500 000 Received loan 8 Apr 2020
Anton Westbergh - 300 000 SELL 19 Feb 2020
Anton Westbergh - 93 978 SELL 19 Feb 2020
Dr. Klemens Kundratitz - 611 989 SELL 3 Jun 2019
Lars Wingefors +6 267 338 Received loan 15 Mar 2019
Lars Wingefors +4 732 662 Received loan 28 Feb 2019

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