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Flexion Mobile

Reaching a wider Android market

Flexion is primarily a game distributor on the alternative Android market (which does not include Google Play or China). It offers game developers an opportunity to reach a wider Android market than Google Play, through its full service offering and unique technology, without any additional effort for the game developer itself. The Android mobile games market is growing strongly, with Google Play as the frontrunner. We believe that the alternative Android market has a good chance to match it, or even grow faster in percentage terms.

We believe that Flexion has established a strong market position within the alternative Android market, and is well positioned to reap the benefits of the current fragmentation trend. We regard the fiscal year 2018/19 as a proof of concept. If Flexion is able to keep broadening its game portfolio and enhance its distribution power through new channel deals, it will lead the company to a bright future.

Long-term risks include dependence on key partners, increased competition, and consolidation in the Android market. We think that key channel partners are of particular importance to Flexion, as they are limited. There is currently no direct competitor to Flexion, because it is a first-mover in a niche market, but we expect increased competition. Furthermore, the current fragmentation wave on the Android market will not last forever. Eventual consolidation is likely, which might decrease the value Flexion brings to its customers.

GBPm 2018 2019e 2020e
Sales 6 13 27
Sales growth (%) 150,5 108,3 100,6
EBITDA -2 -2 0
EBITDA margin (%) -27,2 -11,7 -1,5
EBIT adj -2 -2 -1
EBIT adj margin (%) -29,3 -12,7 -2,1
Pretax profit -2 -2 -1
EPS rep -0,04 -0,04 -0,01
EPS growth (%) -75,1 8,6 66,3
EPS adj -0,04 -0,04 -0,01
DPS 0 0 0
EV/EBITDA (x) -10,7 -21,2 -82
EV/EBIT adj (x) -10 -19,5 -58,5
P/E (x) -13,7 -22,3 -66,1
P/E adj (x) -13,7 -22,3 -66,1
EV/sales (x) 2,9 2,5 1,2
FCF yield (%) -0,9 -4,4 -1,4
Dividend yield (%) 0 0 0
Net IB debt/EBITDA 3,4 2,4 9
GBPm 2018 2019e 2020e
Sales 6 13 27
COGS -5 -12 -24
Gross profit 1 2 3
Other operating items -3 -3 -4
EBITDA -2 -2 0
Depreciation on tangibles 0 0 0
Depreciation on intangibles 0 0 0
EBITA -2 -2 -1
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT -2 -2 -1
Other financial items 0 0 0
Net financial items 0 0 0
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit -2 -2 -1
Tax 0 0 0
Net profit -2 -2 -1
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -2 -2 -1
EPS -0,04 -0,04 -0,01
EPS Adj -0,04 -0,04 -0,01
Total extraordinary items after tax 0 0 0
Tax rate (%) -4,4 -3,2 -3
Gross margin (%) 14,7 11,2 11,9
EBITDA margin (%) -27,2 -11,7 -1,5
EBITA margin (%) -29,3 -12,7 -2,1
EBIT margin (%) -29,3 -12,7 -2,1
Pretax margin (%) -29,4 -12,8 -2,1
Net margin (%) -28,2 -12,4 -2,1
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 150,5 108,3 100,6
EBITDA growth (%) -128,6 10,2 74,1
EBIT growth (%) -131,5 9,5 66,6
Net profit growth (%) -144,7 8,2 66,3
EPS growth (%) -75,1 8,6 66,3
Profitability 2018 2019 2020
ROE (%) -69,1 -37,7 -17
ROE Adj (%) -69,1 -37,7 -17
ROCE (%) -71,4 -38,3 -16,9
ROCE Adj(%) -71,4 -38,3 -16,9
ROIC (%) 508,8 235,3 83
ROIC Adj (%) 508,8 235,3 83
Adj earnings numbers 2018 2019 2020
EBITDA Adj -2 -2 0
EBITDA Adj margin (%) -27,2 -11,7 -1,5
EBITA Adj -2 -2 -1
EBITA Adj margin (%) -29,3 -12,7 -2,1
EBIT Adj -2 -2 -1
EBIT Adj margin (%) -29,3 -12,7 -2,1
Pretax profit Adj -2 -2 -1
Net profit Adj -2 -2 -1
Net profit to shareholders Adj -2 -2 -1
Net Adj margin (%) -28,2 -12,4 -2,1
GBPm 2018 2019e 2020e
Total liabilities and equity 0 0 8
Net IB debt -6 -4 -4
Net IB debt excl. pension debt -6 -4 -4
Capital invested -1 -1 -1
Working capital -1 -1 -2
EV breakdown 2018 2019 2020
Market cap. diluted (m) 25 37 37
Net IB debt Adj -6 -4 -4
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 19 33 33
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 163,5 184,9 407,1
Capital invested turnover (%) -1813,9 -1906,7 -4034,7
Capital employed turnover (%) 243,4 300,5 795,9
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 20,1 20,8 12
Working capital / sales (%) -8,8 -9,1 -5,3
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) -113,5 -104,9 -121,5
Net debt / market cap (%) -23,8 -11 -10,8
Equity ratio (%) 66,6 54 45,9
Net IB debt adj. / equity (%) -113,5 -104,9 -121,5
Current ratio (%) 283,5 198 160,6
EBITDA / net interest (%) -24727,8 -15397,7 -5461,7
Net IB debt / EBITDA (%) 339,8 238,6 901,4
Interest cover (%) -26646,4 -16724,9 -7652,7
EBITDA -2 -2 0
Net financial items 0 0 0
Paid tax 0 0 0
Non-cash items 0 0 0
Cash flow before change in WC -2 -2 0
Change in WC 1 0 0
Operating cash flow 0 -1 0
CAPEX tangible fixed assets 0 0 0
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 0 0
Free cash flow 0 -2 -1
Dividend paid 0 0 0
Share issues and buybacks 0 0 0
Other non cash items 6 -1 0
Decrease in net IB debt 6 -2 0
Balance Sheet (GBPm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 0 1 1
Tangible fixed assets 0 0 0
Other fixed assets 0 0 0
Fixed assets 0 1 1
Inventories 0 0 0
Receivables 1 2 2
Other current assets 0 1 0
Cash and liquid assets 6 4 4
Total assets 8 7 7
Shareholders equity 5 4 3
Minority 0 0 0
Total equity 5 4 3
Long-term debt 0 0 0
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 3 3 3
Other current liabilities 0 0 0
GBPm 2018 2019e 2020e
Shares outstanding adj. 41 41 41
Fully diluted shares Adj 45 45 45
EPS -0,04 -0,04 -0,01
Dividend per share Adj 0 0 0
EPS Adj -0,04 -0,04 -0,01
BVPS 0,13 0,09 0,07
BVPS Adj 0,12 0,07 0,05
Net IB debt / share -0,1 -0,1 -0,1
Share price 0,61 0,82 0,82
Market cap. (m) 25 34 34
Valuation 2018 2019 2020
P/E -13,7 -22,3 -66,1
EV/sales 2,92 2,48 1,24
EV/EBITDA -10,7 -21,2 -82
EV/EBITA -10 -19,5 -58,5
EV/EBIT -10 -19,5 -58,5
Dividend yield (%) 0 0 0
FCF yield (%) -0,9 -4,4 -1,4
P/BVPS 4,33 9,49 11,25
P/BVPS Adj 4,64 11,2 15,01
P/E Adj -13,7 -22,3 -66,1
EV/EBITDA Adj -10,7 -21,2 -82
EV/EBITA Adj -10 -19,5 -58,5
EV/EBIT Adj -10 -19,5 -58,5
EV/cap. employed 3,6 9,2 10,7
Investment ratios 2018 2019 2020
Capex / sales 3,5 2,1 1,2
Capex / depreciation 167,4 302 289,8
Capex tangibles / tangible fixed assets 0 0 0
Capex intangibles / definite intangibles 65,4 51 42,3
Depreciation on intangibles / definite intangibles 13,2 14,8 14,4
Depreciation on tangibles / tangibles 386,3 255,5 33,3

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Media

Flexion Mobile - Interview with CFO Niklas Koresaar
Flexion Mobile - Company presentation with CFO Niklas Koresaar

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Main shareholders - Flexion Mobile

Main shareholders Share capital % Voting shares % Verified
Mobile Sensations Ltd 28.2 % 28.2 % 30 Jun 2019
Carl Palmstierna 9.1 % 9.1 % 30 Jun 2019
Zallaz SA 8.1 % 8.1 % 13 Jun 2018
Sjätte AP-fonden 4.6 % 4.6 % 30 Jun 2019
Claes Kalborg 0.3 % 0.3 % 13 Jun 2018
Andreas Mac Mahon 0.2 % 0.2 % 13 Jun 2018
Niklas Koresaar 0.1 % 0.1 % 13 Jun 2018
Source: Holdings by Modular Finance AB