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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 7533 9035
Sales growth (%) -8,8 43,5 19,9
EBITDA 1821 2673 3392
EBITDA margin (%) 34,7 35,5 37,5
EBIT adj 345 -81 312
EBIT adj margin (%) 6,6 -1,1 3,4
Pretax profit 409 -105 292
EPS rep 0,91 -0,29 0,58
EPS growth (%) -78,5 -131,9 300,1
EPS adj 0,91 -0,29 0,58
DPS 0 0 0
EV/EBITDA (x) 11,8 19,7 15,2
EV/EBIT adj (x) 62,1 -650,9 165,2
P/E (x) 78 -500,6 250,2
P/E adj (x) 78 -500,6 250,2
EV/sales (x) 4,1 7 5,7
FCF yield (%) -4,2 1 2,2
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -0,5 -0,6 -0,8
SEKm 2019 2020e 2021e
Sales 5249 7533 9035
COGS -2576 -3558 -4123
Gross profit 2673 3974 4912
Other operating items -852 -1301 -1520
EBITDA 1821 2673 3392
Depreciation on tangibles 0 0 0
Depreciation on intangibles -1476 -2754 -3081
EBITA 345 -81 312
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 345 -81 312
Other financial items 0 0 0
Net financial items 63 -24 -20
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 409 -105 292
Tax -126 -3 -76
Net profit 283 -108 216
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 283 -108 216
EPS 0,91 -0,29 0,58
EPS Adj 0,91 -0,29 0,58
Total extraordinary items after tax 0 0 0
Tax rate (%) -30,7 2,8 -26
Gross margin (%) 50,9 52,8 54,4
EBITDA margin (%) 34,7 35,5 37,5
EBITA margin (%) 6,6 -1,1 3,4
EBIT margin (%) 6,6 -1,1 3,4
Pretax margin (%) 7,8 -1,4 3,2
Net margin (%) 5,4 -1,4 2,4
Growth rates Y/Y 2019 2020 2021
Sales growth (%) -8,8 43,5 19,9
EBITDA growth (%) 14,3 46,8 26,9
EBIT growth (%) -39,9 -123,4 485,4
Net profit growth (%) -28,7 -138,1 300,1
EPS growth (%) -78,5 -131,9 300,1
Profitability 2019 2020 2021
ROE (%) 4,1 -1,1 1,7
ROE Adj (%) 4,1 -1,1 1,7
ROCE (%) 5,8 -0,8 2,4
ROCE Adj(%) 5,8 -0,8 2,4
ROIC (%) 4,5 -1 2,2
ROIC Adj (%) 4,5 -1 2,2
Adj earnings numbers 2019 2020 2021
EBITDA Adj 1821 2673 3392
EBITDA Adj margin (%) 34,7 35,5 37,5
EBITA Adj 345 -81 312
EBITA Adj margin (%) 6,6 -1,1 3,4
EBIT Adj 345 -81 312
EBIT Adj margin (%) 6,6 -1,1 3,4
Pretax profit Adj 409 -105 292
Net profit Adj 283 -108 216
Net profit to shareholders Adj 283 -108 216
Net Adj margin (%) 5,4 -1,4 2,4
SEKm 2019 2020e 2021e
EBITDA 1821 2673 3392
Net financial items 63 -24 -20
Paid tax -126 -3 -76
Non-cash items 0 0 0
Cash flow before change in WC 1759 2646 3296
Change in WC -84 1234 399
Operating cash flow 1675 3680 3695
CAPEX tangible fixed assets -52 -75 -90
CAPEX intangible fixed assets -1653 -2109 -2439
Acquisitions and disposals -890 -950 0
Free cash flow -921 545 1165
Dividend paid 0 0 0
Share issues and buybacks 0 0 0
Other non cash items -427 -50 0
Decrease in net IB debt -1348 695 1165
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 1412 7412 7412
Indefinite intangible assets 0 0 0
Definite intangible assets 4521 3876 3235
Tangible fixed assets 208 283 374
Other fixed assets 196 196 196
Fixed assets 6337 11768 11217
Inventories 394 414 497
Receivables 1575 1732 2078
Other current assets 0 0 0
Cash and liquid assets 1581 2276 3442
Total assets 9886 16191 17233
Shareholders equity 7393 12285 12501
Minority 0 0 0
Total equity 7393 12285 12501
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 2787 3614
Other current liabilities 0 200 200
Total liabilities and equity 9886 16191 17233
Net IB debt -859 -1554 -2720
Net IB debt excl. pension debt -859 -1554 -2720
Capital invested 6534 10731 9782
Working capital 394 -840 -1239
EV breakdown 2019 2020 2021
Market cap. diluted (m) 22083 53991 53991
Net IB debt Adj -663 -1358 -2523
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 21421 52633 51468
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 56,8 57,8 54,1
Capital invested turnover (%) 98,1 87,3 88,1
Capital employed turnover (%) 67,3 70 67,9
Inventories / sales (%) 6,8 5,4 5
Customer advances / sales (%) 0 0 0
Payables / sales (%) 27,5 29 35,4
Working capital / sales (%) 6,7 -3 -11,5
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -11,6 -12,7 -21,8
Net debt / market cap (%) -3,9 -2,9 -5
Equity ratio (%) 74,8 75,9 72,5
Net IB debt adj. / equity (%) -9 -11,1 -20,2
Current ratio (%) 225,4 148,1 157,7
EBITDA / net interest (%) -2872,4 11136,6 16960,7
Net IB debt / EBITDA (%) -47,2 -58,2 -80,2
Interest cover (%) 974,9 -336,9 1266,5
SEKm 2019 2020e 2021e
Shares outstanding adj. 312 372 372
Fully diluted shares Adj 312 372 372
EPS 0,91 -0,29 0,58
Dividend per share Adj 0 0 0
EPS Adj 0,91 -0,29 0,58
BVPS 23,7 32,99 33,57
BVPS Adj 4,68 2,68 4,98
Net IB debt / share -2,8 -4,2 -7,3
Share price 71,46 145 145
Market cap. (m) 22297 53991 53991
Valuation 2019 2020 2021
P/E 78 -500,6 250,2
EV/sales 4,08 6,99 5,7
EV/EBITDA 11,8 19,7 15,2
EV/EBITA 62,1 -650,9 165,2
EV/EBIT 62,1 -650,9 165,2
Dividend yield (%) 0 0 0
FCF yield (%) -4,2 1 2,2
P/BVPS 2,99 4,39 4,32
P/BVPS Adj 15,12 54,13 29,12
P/E Adj 78 -500,6 250,2
EV/EBITDA Adj 11,8 19,7 15,2
EV/EBITA Adj 62,1 -650,9 165,2
EV/EBIT Adj 62,1 -650,9 165,2
EV/cap. employed 2,6 4 3,8
Investment ratios 2019 2020 2021
Capex / sales 32,5 29 28
Capex / depreciation 115,6 79,3 82,1
Capex tangibles / tangible fixed assets 25,2 26,6 24,2
Capex intangibles / definite intangibles 36,6 54,4 75,4
Depreciation on intangibles / definite intangibles 32,6 71 95,2
Depreciation on tangibles / tangibles 0 0 0

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Main shareholders - Embracer Group

Main shareholders Share capital % Voting shares % Verified
Lars Wingefors 29.0 % 42.1 % 30 Jun 2020
S3D Media Inc 10.8 % 14.6 % 30 Apr 2020
Erik Stenberg 6.3 % 9.1 % 30 Jun 2020
Swedbank Robur Fonder 7.0 % 3.9 % 30 Jun 2020
CMB Holding AB 2.2 % 3.1 % 30 Jun 2020
Handelsbanken Fonder 5.3 % 2.9 % 30 Jun 2020
Didner & Gerge Fonder 3.1 % 1.7 % 30 Jun 2020
Första AP-fonden 2.2 % 1.2 % 30 Jun 2020
Andra AP-fonden 1.3 % 0.7 % 30 Jun 2020
ODIN Fonder 1.2 % 0.7 % 30 Jun 2020
Source: Holdings by Modular Finance AB

Insider list - Embracer Group

Name Quantity Code Date
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
Lars Wingefors -11 000 000 Received loan 20 Feb 2019
Reinhard Gratl - 1 686 SELL 14 Feb 2019
Wingefors Depå Tre AB +3 250 733 BUY 27 Dec 2018

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