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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 8967 15885 17513
Sales growth (%) 70,8 77,1 10,2
EBITDA 3668 6666 7594
EBITDA margin (%) 40,9 42 43,4
EBIT adj 2609 5172 5812
EBIT adj margin (%) 29,1 32,6 33,2
Pretax profit 239 -1292 -591
EPS rep -0,06 -3,33 -1,52
EPS growth (%) -107,1 -5051,6 54,3
EPS adj 5,73 9,85 11,54
DPS 0 0 0
EV/EBITDA (x) 24,8 16,2 13,9
EV/EBIT adj (x) 34,9 20,9 18,1
P/E (x) -3811,4 -74 -161,8
P/E adj (x) 43 25 21,4
EV/sales (x) 10,2 6,8 6
FCF yield (%) -3,1 0,1 2,4
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -3,4 -1,9 -2
Lease adj. FCF yield (%) -3,1 0,1 2,4
Lease adj. ND/EBITDA -2,1 -1 -1,1
SEKm 2020 2021e 2022e
Sales 8967 15885 17513
COGS -3742 6507 7039
Gross profit 5225 22392 24552
Other operating items -1557 -15726 -16957
EBITDA 3668 6666 7594
Depreciation on tangibles 0 0 0
Depreciation on intangibles -3486 -7939 -8166
EBITA 182 -1272 -571
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 182 -1272 -571
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 239 -1292 -591
Tax -267 -336 -154
Net profit -27 -1628 -745
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -27 -1628 -745
EPS -0,06 -3,33 -1,52
EPS Adj 5,73 9,85 11,54
Total extraordinary items after tax -2427,3 -6444 -6383
Tax rate (%) -111,3 26 26
Gross margin (%) 58,3 141 140,2
EBITDA margin (%) 40,9 42 43,4
EBITA margin (%) 2 -8 -3,3
EBIT margin (%) 2 -8 -3,3
Pretax margin (%) 2,7 -8,1 -3,4
Net margin (%) -0,3 -10,3 -4,3
Growth rates Y/Y 2020 2021 2022
Sales growth (%) 70,8 77,1 10,2
EBITDA growth (%) 101,4 81,7 13,9
EBIT growth (%) -47,3 -799,5 55,1
Net profit growth (%) -109,6 -5909 54,3
EPS growth (%) -107,1 -5051,6 54,3
Profitability 2020 2021 2022
ROE (%) -0,1 -4,5 -1,9
ROE Adj (%) 11,8 13,3 14,3
ROCE (%) 1,5 -3,3 -1,4
ROCE Adj(%) 12,4 13,4 13,9
ROIC (%) -0,2 -6,7 -2,8
ROIC Adj (%) -2,2 27,4 28,7
Adj earnings numbers 2020 2021 2022
EBITDA Adj 6095 13110 13977
EBITDA Adj margin (%) 68 82,5 79,8
EBITA Adj 2609 5172 5812
EBITA Adj margin (%) 29,1 32,6 33,2
EBIT Adj 2609 5172 5812
EBIT Adj margin (%) 29,1 32,6 33,2
Pretax profit Adj 2667 5152 5792
Net profit Adj 2400 4816 5638
Net profit to shareholders Adj 2400 4816 5638
Net Adj margin (%) 26,8 30,3 32,2
Depreciation and amortisation -3486 -7939 -8166
Of which leasing depreciation 0 0 0
EO items -2427 -6444 -6383
Impairment and PPA amortisation 0 0 0
EBITDA lease Adj 6095 13110 13977
EBITDA lease Adj margin (%) 68 82,5 79,8
Leasing payments 0 0 0
SEKm 2020 2021e 2022e
EBITDA 3668 6666 7594
Net financial items 58 -20 -20
Paid tax -277 -308 -336
Non-cash items 0 0 0
Cash flow before change in WC 3448 6338 7238
Change in WC -222 -28 182
Operating cash flow 3227 6310 7421
CAPEX tangible fixed assets -88 -159 -175
CAPEX intangible fixed assets -2120 -3971 -4378
Acquisitions and disposals -4186 -2100 0
Free cash flow -3167 80 2867
Dividend paid 0 0 0
Share issues and buybacks 15158 0 0
Other non cash items -533 0 0
Decrease in net IB debt 5193 317 2239
Balance Sheet (SEKm) 2020 2021 2022
Goodwill 14569 18817 13807
Indefinite intangible assets 0 0 0
Definite intangible assets 4484 1256 -1723
Tangible fixed assets 285 323 440
Other fixed assets 196 196 196
Fixed assets 20266 26509 23641
Inventories 279 279 279
Receivables 1878 1878 1878
Other current assets 0 0 0
Cash and liquid assets 14449 14529 17396
Total assets 36872 43195 43195
Shareholders equity 33169 39492 39492
Minority 0 0 0
Total equity 33169 39492 39492
Long-term debt 267 267 267
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 2041 2041 2041
Accounts payable 1394 1394 1394
Other current liabilities 0 0 0
Total liabilities and equity 36872 43195 43195
Net IB debt -12507 -12587 -15454
Net IB debt excl. pension debt -12507 -12587 -15454
Capital invested 20662 26905 24038
Working capital 763 763 763
EV breakdown 2020 2021 2022
Market cap. diluted (m) 103284 120475 120475
Net IB debt Adj -12140 -12220 -15088
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 91143 108255 105387
Capital efficiency (%) 2020 2021 2022
Total assets turnover (%) 37,7 39,7 40,5
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 (%) 7,2 4,8 4,4
Financial risk and debt service 2020 2021 2022
Net debt / equity (%) -37,7 -31,9 -39,1
Net debt / market cap (%) -22,6 -10,4 -12,8
Equity ratio (%) 90 91,4 91,4
Net IB debt adj. / equity (%) -36,6 -30,9 -38,2
Current ratio (%) 483,4 485,7 569,2
EBITDA / net interest (%) -6379,3 33330,7 37972
Net IB debt / EBITDA (%) -341 -188,8 -203,5
Interest cover (%) 332,7 -5069,5 -2264,4
Lease liability amortisation 0 0 0
Other intangible assets 5045 7002 9028
Right-of-use asset 0 0 0
Total other fixed assets 367 367 367
Leasing liability 0 0 0
Total other long-term liabilities 0 0 0
Net IB debt excl. leasing -12507 -12587 -15454
Net IB debt / EBITDA lease Adj (%) -205,2 -96 -110,6
SEKm 2020 2021e 2022e
Shares outstanding adj. 419 489 489
Fully diluted shares Adj 419 489 489
EPS -0,06 -3,33 -1,52
Dividend per share Adj 0 0 0
EPS Adj 5,73 9,85 11,54
BVPS 79,16 80,8 80,8
BVPS Adj 32,35 27,98 34,08
Net IB debt / share -29,8 -25,8 -31,6
Share price 132,01 246,5 246,5
Market cap. (m) 55313 120475 120475
Valuation 2020 2021 2022
P/E -3811,4 -74 -161,8
EV/sales 10,16 6,81 6,02
EV/EBITDA 24,8 16,2 13,9
EV/EBITA 501,1 -85,1 -184,5
EV/EBIT 501,1 -85,1 -184,5
Dividend yield (%) 0 0 0
FCF yield (%) -3,1 0,1 2,4
P/BVPS 3,11 3,05 3,05
P/BVPS Adj 7,62 8,81 7,23
P/E Adj 43 25 21,4
EV/EBITDA Adj 15 8,3 7,5
EV/EBITA Adj 34,9 20,9 18,1
EV/EBIT Adj 34,9 20,9 18,1
EV/cap. employed 2,6 2,6 2,5
Investment ratios 2020 2021 2022
Capex / sales 24,6 26 26
Capex / depreciation 63,3 52 55,8
Capex tangibles / tangible fixed assets 30,8 49,1 39,8
Capex intangibles / definite intangibles 42 56,7 48,5
Depreciation on intangibles / definite intangibles 69,1 113,4 90,5
Depreciation on tangibles / tangibles 0 0 0
Lease adj. FCF yield (%) -3,1 0,1 2,4

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Main shareholders - Embracer Group

Main shareholders Share capital % Voting shares % Verified
Lars Wingefors AB 26.2 % 45.7 % 30 Apr 2021
S3D Media Inc 8.3 % 12.4 % 30 Apr 2021
Swedbank Robur Fonder 5.5 % 3.4 % 30 Apr 2021
Canada Pension Plan Investment Board (CPP) 2.8 % 1.7 % 18 Feb 2021
Handelsbanken Fonder 2.6 % 1.6 % 30 Apr 2021
Didner & Gerge Fonder 2.2 % 1.4 % 30 Apr 2021
ODIN Fonder 1.8 % 1.1 % 30 Apr 2021
Ken Go 1.7 % 0.9 % 8 Sep 2020
AMF Pension & Fonder 1.4 % 0.9 % 30 Apr 2021
Avanza Pension 1.2 % 0.8 % 30 Apr 2021
Source: Holdings by Modular Finance AB

Insider list - Embracer Group

Name Quantity Code Date
Matthew Karch +3 772 419 * 19 Apr 2021
Lars Wingefors +36 000 000 Received loan 24 Mar 2021
Lars Wingefors -36 000 000 Received loan 17 Mar 2021
Per Arne Lundberg - 723 SELL 19 Feb 2021
Lars Wingefors +25 219 472 BUY 10 Dec 2020
Erik Stenberg -4 223 172 SELL 10 Dec 2020
Lars Wingefors +9 752 199 BUY 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

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