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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 9024 17263 20169
Sales growth (%) 71,9 91,3 16,8
EBITDA 3985 7737 9393
EBITDA margin (%) 44,2 44,8 46,6
EBIT adj 2912 6019 7073
EBIT adj margin (%) 32,3 34,9 35,1
Pretax profit 296 -1346 -1039
EPS rep -0,11 -1,94 -1,4
EPS growth (%) -125,1 -1601,1 27,5
EPS adj 3,19 5,55 6,7
DPS 0 0 0
EV/EBITDA (x) 17,9 8,8 6,9
EV/EBIT adj (x) 24,5 11,3 9,1
P/E (x) -863,7 -40,6 -56
P/E adj (x) 30,8 14,2 11,8
EV/sales (x) 7,9 3,9 3,2
FCF yield (%) -3,5 -2,6 5
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -3,3 -1,4 -1,5
Lease adj. FCF yield (%) -3,5 -2,6 5
Lease adj. ND/EBITDA -1,9 -0,7 -0,8
SEKm 2020 2021e 2022e
Sales 9024 17263 20169
COGS -3618 -5167 -5989
Gross profit 5406 12096 14180
Other operating items -1420 -4359 -4787
EBITDA 3985 7737 9393
Depreciation on tangibles 0 0 0
Depreciation on intangibles -1476 -3486 -7939
EBITA 92 -1430 -1019
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 92 -1430 -1019
Other financial items 0 0 0
Net financial items 203 83 -20
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 296 -1346 -1039
Tax -393 -580 -364
Net profit -97 -1926 -1403
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -97 -1926 -1403
EPS -0,11 -1,94 -1,4
EPS Adj 3,19 5,55 6,7
Total extraordinary items after tax -2819,9 -7448,7 -8092
Tax rate (%) -132,9 43,1 35
Gross margin (%) 59,9 70,1 70,3
EBITDA margin (%) 44,2 44,8 46,6
EBITA margin (%) 1 -8,3 -5,1
EBIT margin (%) 1 -8,3 -5,1
Pretax margin (%) 3,3 -7,8 -5,2
Net margin (%) -1,1 -11,2 -7
Growth rates Y/Y 2020 2021 2022
Sales growth (%) 71,9 91,3 16,8
EBITDA growth (%) 118,8 94,1 21,4
EBIT growth (%) -73,2 -1649,1 28,7
Net profit growth (%) -134,4 -1881,8 27,2
EPS growth (%) -125,1 -1601,1 27,5
Profitability 2020 2021 2022
ROE (%) -0,5 -5,8 -3,9
ROE Adj (%) 14,5 16,7 18,6
ROCE (%) 2,2 -3,6 -2,7
ROCE Adj(%) 15,9 17,8 18,7
ROIC (%) -0,3 -7,7 -4,1
ROIC Adj (%) -8,2 32,5 28,5
Adj earnings numbers 2020 2021 2022
EBITDA Adj 6805 15186 17485
EBITDA Adj margin (%) 75,4 88 86,7
EBITA Adj 2912 6019 7073
EBITA Adj margin (%) 32,3 34,9 35,1
EBIT Adj 2912 6019 7073
EBIT Adj margin (%) 32,3 34,9 35,1
Pretax profit Adj 3115 6102 7053
Net profit Adj 2723 5522 6689
Net profit to shareholders Adj 2723 5522 6689
Net Adj margin (%) 30,2 32 33,2
Depreciation and amortisation -3893 -9167 -10412
Of which leasing depreciation 0 0 0
EO items -2820 -7449 -8092
Impairment and PPA amortisation 0 0 0
EBITDA lease Adj 6805 15186 17485
EBITDA lease Adj margin (%) 75,4 88 86,7
Leasing payments 0 0 0
SEKm 2020 2021e 2022e
EBITDA 3985 7737 9393
Net financial items 203 83 -20
Paid tax -277 -422 -580
Non-cash items 0 0 0
Cash flow before change in WC 3911 7398 8793
Change in WC -12 -883 216
Operating cash flow 3899 6515 9009
CAPEX tangible fixed assets -70 -173 -202
CAPEX intangible fixed assets -2139 -4143 -4840
Acquisitions and disposals -4591 -4200 0
Free cash flow -2900 -2001 3967
Dividend paid 0 0 0
Share issues and buybacks 14725 0 0
Other non cash items 257 -11231 1443
Decrease in net IB debt -1338 5193 317
Balance Sheet (SEKm) 2020 2021 2022
Goodwill 10804 26285 18832
Indefinite intangible assets 0 0 0
Definite intangible assets 4521 4484 1256
Tangible fixed assets 238 325 419
Other fixed assets 196 196 196
Fixed assets 17199 36503 31093
Inventories 243 243 243
Receivables 2010 2010 2010
Other current assets 0 0 0
Cash and liquid assets 14300 12208 15710
Total assets 33752 50964 49056
Shareholders equity 29982 36054 36054
Minority 0 0 0
Total equity 29982 36054 36054
Long-term debt 246 246 246
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 1494 1494 1494
Accounts payable 2030 2030 2030
Other current liabilities 0 0 0
Total liabilities and equity 33752 50964 49056
Net IB debt -13131 -11039 -14541
Net IB debt excl. pension debt -13131 -11039 -14541
Capital invested 16851 36155 30745
Working capital 223 223 223
EV breakdown 2020 2021 2022
Market cap. diluted (m) 83948 78298 78620
Net IB debt Adj -12560 -10467 -13970
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 71389 67831 64650
Capital efficiency (%) 2020 2021 2022
Total assets turnover (%) 40,7 40,8 40,3
Capital invested turnover (%) 98,2 81,4 81,5
Capital employed turnover (%) 67,3 57,3 59,4
Inventories / sales (%) 6,8 5,1 4,2
Customer advances / sales (%) 0 0 0
Payables / sales (%) 27,5 27,8 30
Working capital / sales (%) 4,2 1,3 1,1
Financial risk and debt service 2020 2021 2022
Net debt / equity (%) -43,8 -30,6 -40,3
Net debt / market cap (%) -23,3 -14,1 -18,5
Equity ratio (%) 88,8 70,7 73,5
Net IB debt adj. / equity (%) -41,9 -29 -38,7
Current ratio (%) 469,7 410,3 509,7
EBITDA / net interest (%) -1961,3 -9276,9 46964
Net IB debt / EBITDA (%) -329,5 -142,7 -154,8
Interest cover (%) 293,4 -1615,2 -4056,8
Lease liability amortisation 0 0 0
Other intangible assets 5586 9322 11271
Right-of-use asset 0 0 0
Total other fixed assets 572 572 572
Leasing liability 0 0 0
Total other long-term liabilities 0 11140 9232
Net IB debt excl. leasing -13131 -11039 -14541
Net IB debt / EBITDA lease Adj (%) -193 -72,7 -83,2
SEKm 2020 2021e 2022e
Shares outstanding adj. 854 995 999
Fully diluted shares Adj 854 995 999
EPS -0,11 -1,94 -1,4
Dividend per share Adj 0 0 0
EPS Adj 3,19 5,55 6,7
BVPS 35,11 36,24 36,09
BVPS Adj 15,92 0,45 5,96
Net IB debt / share -15,4 -11,1 -14,6
Share price 66,01 78,7 78,7
Market cap. (m) 56369 78298 78620
Valuation 2020 2021 2022
P/E -863,7 -40,6 -56
EV/sales 7,91 3,93 3,21
EV/EBITDA 17,9 8,8 6,9
EV/EBITA 773,4 -47,4 -63,4
EV/EBIT 773,4 -47,4 -63,4
Dividend yield (%) 0 0 0
FCF yield (%) -3,5 -2,6 5
P/BVPS 2,8 2,17 2,18
P/BVPS Adj 6,18 175,23 13,21
P/E Adj 30,8 14,2 11,8
EV/EBITDA Adj 10,5 4,5 3,7
EV/EBITA Adj 24,5 11,3 9,1
EV/EBIT Adj 24,5 11,3 9,1
EV/cap. employed 2,3 1,8 1,7
Investment ratios 2020 2021 2022
Capex / sales 24,5 25 25
Capex / depreciation 56,7 47,1 48,4
Capex tangibles / tangible fixed assets 29,3 53,2 48,1
Capex intangibles / definite intangibles 38,3 44,4 42,9
Depreciation on intangibles / definite intangibles 69,7 98,3 92,4
Depreciation on tangibles / tangibles 0 0 0
Lease adj. FCF yield (%) -3,5 -2,6 5

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Main shareholders - Embracer Group

Main shareholders Share capital % Voting shares % Verified
Lars Wingefors AB 25.8 % 45.3 % 28 Sep 2021
S3D Media Inc 8.4 % 12.4 % 29 Sep 2021
Canada Pension Plan Investment Board (CPP) 5.5 % 3.4 % 29 Sep 2021
Swedbank Robur Fonder 5.3 % 3.4 % 28 Sep 2021
Handelsbanken Fonder 3.0 % 1.9 % 30 Sep 2021
Didner & Gerge Fonder 2.5 % 1.6 % 28 Sep 2021
ODIN Fonder 2.1 % 1.3 % 30 Sep 2021
AMF Pension & Fonder 1.6 % 1.0 % 28 Sep 2021
BlackRock 1.3 % 0.8 % 30 Sep 2021
Ken Go 1.3 % 0.8 % 29 Sep 2021
Source: Holdings by Modular Finance AB

Insider list - Embracer Group

Name Quantity Code Date
Per Arne Lundberg + 15 400 BUY 1 Sep 2021
Kenneth James Go + 332 704 * 23 Aug 2021
Matthew Karch + 35 000 BUY 20 Aug 2021
Ulf Hjalmarsson + 1 500 BUY 19 Aug 2021
Ulf Hjalmarsson + 1 000 BUY 19 Aug 2021
Kicki Wallje Lund + 2 500 BUY 18 Aug 2021
Lars Wingefors + 150 000 BUY 18 Aug 2021
Johan Ekström + 2 600 BUY 18 Aug 2021
Karl Jacob Mathias Jonmyren + 4 500 BUY 18 Aug 2021
Matthew Karch +3 772 419 * 19 Apr 2021

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