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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 8497 15703 17288
Sales growth (%) 61,9 84,8 10,1
EBITDA 3620 6500 7591
EBITDA margin (%) 42,6 41,4 43,9
EBIT adj 2561 5006 5808
EBIT adj margin (%) 30,1 31,9 33,6
Pretax profit 191 -1458 -595
EPS rep -0,18 -3,76 -1,53
EPS growth (%) -119,9 -1986,7 59,2
EPS adj 5,61 9,42 11,53
DPS 0 0 0
EV/EBITDA (x) 24,8 16,2 13,6
EV/EBIT adj (x) 35 21 17,7
P/E (x) -1265,3 -60,6 -148,7
P/E adj (x) 40,6 24,2 19,8
EV/sales (x) 10,6 6,7 6
FCF yield (%) -2,3 -0,6 2
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -1,7 -1 -1,1
N/A N/A N/A
SEKm 2020 2021e 2022e
Sales 8497 15703 17288
COGS -3341 -6255 -6758
Gross profit 5156 9448 10530
Other operating items -1536 -2948 -2939
EBITDA 3620 6500 7591
Depreciation on tangibles 0 0 0
Depreciation on intangibles -3486 -7939 -8166
EBITA 134 -1438 -575
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 134 -1438 -575
Other financial items 0 0 0
Net financial items 58 -20 -20
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 191 -1458 -595
Tax -267 -379 -155
Net profit -76 -1838 -749
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -76 -1838 -749
EPS -0,18 -3,76 -1,53
EPS Adj 5,61 9,42 11,53
Total extraordinary items after tax -2427,3 -6444 -6383
Tax rate (%) -139,5 26 26
Gross margin (%) 60,7 60,2 60,9
EBITDA margin (%) 42,6 41,4 43,9
EBITA margin (%) 1,6 -9,2 -3,3
EBIT margin (%) 1,6 -9,2 -3,3
Pretax margin (%) 2,2 -9,3 -3,4
Net margin (%) -0,9 -11,7 -4,3
Growth rates Y/Y 2020 2021 2022
Sales growth (%) 61,9 84,8 10,1
EBITDA growth (%) 98,7 79,6 16,8
EBIT growth (%) -61,3 -1177,5 60,1
Net profit growth (%) -126,7 -2334 59,2
EPS growth (%) -119,9 -1986,7 59,2
Profitability 2020 2021 2022
ROE (%) -0,5 -7,2 -2,5
ROE Adj (%) 16,9 18,1 18,7
ROCE (%) 2 -5,4 -1,8
ROCE Adj(%) 18,4 19 18,7
ROIC (%) -0,5 -9,4 -3,2
ROIC Adj (%) -9,7 32,7 32,2
Adj earnings numbers 2020 2021 2022
EBITDA Adj 6047 12944 13974
EBITDA Adj margin (%) 71,2 82,4 80,8
EBITA Adj 2561 5006 5808
EBITA Adj margin (%) 30,1 31,9 33,6
EBIT Adj 2561 5006 5808
EBIT Adj margin (%) 30,1 31,9 33,6
Pretax profit Adj 2618 4986 5788
Net profit Adj 2352 4606 5634
Net profit to shareholders Adj 2352 4606 5634
Net Adj margin (%) 27,7 29,3 32,6
N/A N/A N/A
SEKm 2020 2021e 2022e
EBITDA 3620 6500 7591
Net financial items 58 -20 -20
Paid tax -267 -379 -155
Non-cash items 0 0 0
Cash flow before change in WC 3411 6101 7416
Change in WC 1116 1084 182
Operating cash flow 4527 7184 7599
CAPEX tangible fixed assets -85 -157 -173
CAPEX intangible fixed assets -2549 -4711 -5186
Acquisitions and disposals -4103 -3000 0
Free cash flow -2210 -683 2239
Dividend paid 0 0 0
Share issues and buybacks 6000 0 0
Other non cash items 1203 1000 0
Decrease in net IB debt 5193 317 2239
Balance Sheet (SEKm) 2020 2021 2022
Goodwill 10512 22512 22512
Indefinite intangible assets 0 0 0
Definite intangible assets 4484 1256 -1723
Tangible fixed assets 283 440 613
Other fixed assets 196 196 196
Fixed assets 15475 24404 21598
Inventories 467 864 951
Receivables 1954 3612 3976
Other current assets 0 2000 2000
Cash and liquid assets 6784 7100 9339
Total assets 24680 37979 37864
Shareholders equity 20418 30580 29831
Minority 0 0 0
Total equity 20418 30580 29831
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 3144 6281 6915
Other current liabilities 200 200 200
Total liabilities and equity 24680 37979 37864
Net IB debt -6062 -6378 -8617
Net IB debt excl. pension debt -6062 -6378 -8617
Capital invested 14356 24202 21213
Working capital -922 -6 -188
EV breakdown 2020 2021 2022
Market cap. diluted (m) 95532 111433 111433
Net IB debt Adj -5865 -6182 -8421
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 89667 105251 103012
Capital efficiency (%) 2020 2021 2022
Total assets turnover (%) 49,2 50,1 45,6
Capital invested turnover (%) 81,4 81,5 76,1
Capital employed turnover (%) 57,3 59,4 55,5
Inventories / sales (%) 5,1 4,2 5,2
Customer advances / sales (%) 0 0 0
Payables / sales (%) 27,8 30 38,2
Working capital / sales (%) -3,1 -3 -0,6
Financial risk and debt service 2020 2021 2022
Net debt / equity (%) -29,7 -20,9 -28,9
Net debt / market cap (%) -11 -5,7 -7,7
Equity ratio (%) 82,7 80,5 78,8
Net IB debt adj. / equity (%) -28,7 -20,2 -28,2
Current ratio (%) 275,3 209,5 228,6
EBITDA / net interest (%) -6295,1 32500,2 37954,5
Net IB debt / EBITDA (%) -167,5 -98,1 -113,5
Interest cover (%) 285,6 -5733,8 -2278,4
N/A N/A N/A
SEKm 2020 2021e 2022e
Shares outstanding adj. 419 489 489
Fully diluted shares Adj 419 489 489
EPS -0,18 -3,76 -1,53
Dividend per share Adj 0 0 0
EPS Adj 5,61 9,42 11,53
BVPS 48,73 62,57 61,04
BVPS Adj 12,94 13,94 18,5
Net IB debt / share -14,5 -13,1 -17,6
Share price 132,01 228 228
Market cap. (m) 55313 111433 111433
Valuation 2020 2021 2022
P/E -1265,3 -60,6 -148,7
EV/sales 10,55 6,7 5,96
EV/EBITDA 24,8 16,2 13,6
EV/EBITA 671,7 -73,2 -179,3
EV/EBIT 671,7 -73,2 -179,3
Dividend yield (%) 0 0 0
FCF yield (%) -2,3 -0,6 2
P/BVPS 4,68 3,64 3,74
P/BVPS Adj 17,62 16,36 12,32
P/E Adj 40,6 24,2 19,8
EV/EBITDA Adj 14,8 8,1 7,4
EV/EBITA Adj 35 21 17,7
EV/EBIT Adj 35 21 17,7
EV/cap. employed 4,2 3,3 3,4
Investment ratios 2020 2021 2022
Capex / sales 31 31 31
Capex / depreciation 75,6 61,3 65,6
Capex tangibles / tangible fixed assets 30 35,7 28,2
Capex intangibles / definite intangibles 56,9 375 -301
Depreciation on intangibles / definite intangibles 77,8 632 -473,9
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 Jan 2021
S3D Media Inc 9.9 % 13.7 % 31 Jan 2021
Swedbank Robur Fonder 6.5 % 3.8 % 31 Jan 2021
Handelsbanken Fonder 4.0 % 2.3 % 31 Jan 2021
Canada Pension Plan Investment Board (CPP) 2.8 % 1.7 % 18 Feb 2021
Didner & Gerge Fonder 2.6 % 1.5 % 31 Jan 2021
ODIN Fonder 2.0 % 1.1 % 31 Jan 2021
AMF Pension & Fonder 1.7 % 1.0 % 31 Jan 2021
Ken Go 1.7 % 0.9 % 8 Sep 2020
TIN Fonder 1.3 % 0.8 % 31 Jan 2021
Source: Holdings by Modular Finance AB

Insider list - Embracer Group

Name Quantity Code Date
Per Arne Lundberg - 723 SELL 19 Feb 2021
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

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