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G5 Entertainment

G5 Entertainment

Free-to-play games for mobile devices

G5 Entertainment develops and publishes free-to-play games for smartphones and tablets. The games are family-friendly, easy to learn and target a wide audience of experienced and inexperienced players. Distribution is achieved digitally through the various app stores of Apple, Google, Amazon and Windows. In addition to its proprietary games, the company is also a publisher of games licensed by other developers, in which case a royalty is paid to the developer based on the game’s sales performance.

As the total amount of revenue from fully owned games increases, stronger margins are expected due to the lower royalty costs that G5 today pays to external developers. As a market-leader within the hidden object game category, along with a strong fan base, newly launched games are easily adopted by the market. In addition, newly launched games within new gaming categories increase their list positions in app stores without significant marketing due to cross selling.

Despite the business model's stickiness, the company faces the risk that users may stop playing certain games. Risks hence arise if the main driver games, which generate most of G5's revenues, start to lose their momentum. The scenario hence requires other games to drive revenue or else a higher amount of UA costs will be necessary. Also, having its distribution through different app stores, G5 is dependent on both the relationship with the distributers as well as their standard terms and conditions.

SEKm 2020 2021e 2022e
Sales 1398 1587 1777
Sales growth (%) 13,4 13,5 12
EBITDA 304 363 417
EBITDA margin (%) 21,7 22,9 23,4
EBIT adj 182 212 248
EBIT adj margin (%) 13 13,4 13,9
Pretax profit 181 212 248
EPS rep 18,44 21,36 24,97
EPS growth (%) 269,2 15,9 16,9
EPS adj 18,44 21,36 24,97
DPS 2,5 2,5 2,5
EV/EBITDA (x) 11,2 9 7,5
EV/EBIT adj (x) 18,7 15,5 12,6
P/E (x) 22,6 19,5 16,7
P/E adj (x) 22,6 19,5 16,7
EV/sales (x) 2,4 2,1 1,8
FCF yield (%) 3,4 4,2 5
Dividend yield (%) 0,6 0,6 0,6
Net IB debt/EBITDA -0,8 -1 -1,2
N/A N/A N/A
SEKm 2020 2021e 2022e
Sales 1398 1587 1777
COGS -591 -658 -729
Gross profit 807 928 1049
Other operating items -503 -566 -632
EBITDA 304 363 417
Depreciation on tangibles 0 0 0
Depreciation on intangibles -110 -139 -157
EBITA 182 212 248
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 182 212 248
Other financial items 0 0 0
Net financial items -1 0 0
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 181 212 248
Tax -21 -26 -31
Net profit 160 185 217
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 160 185 217
EPS 18,44 21,36 24,97
EPS Adj 18,44 21,36 24,97
Total extraordinary items after tax 0 0 0
Tax rate (%) -11,5 -12,5 -12,5
Gross margin (%) 57,7 58,5 59
EBITDA margin (%) 21,7 22,9 23,4
EBITA margin (%) 13 13,4 13,9
EBIT margin (%) 13 13,4 13,9
Pretax margin (%) 12,9 13,4 13,9
Net margin (%) 11,4 11,7 12,2
Growth rates Y/Y 2020 2021 2022
Sales growth (%) 13,4 13,5 12
EBITDA growth (%) 83,3 19,4 14,9
EBIT growth (%) 250,3 16,8 16,9
Net profit growth (%) 253,6 15,9 16,9
EPS growth (%) 269,2 15,9 16,9
Profitability 2020 2021 2022
ROE (%) 34,4 29,1 25,8
ROE Adj (%) 34,4 29,1 25,8
ROCE (%) 37,7 32,5 29
ROCE Adj(%) 37,7 32,5 29
ROIC (%) 64,2 57,4 55,2
ROIC Adj (%) 64,2 57,4 55,2
Adj earnings numbers 2020 2021 2022
EBITDA Adj 304 363 417
EBITDA Adj margin (%) 21,7 22,9 23,4
EBITA Adj 182 212 248
EBITA Adj margin (%) 13 13,4 13,9
EBIT Adj 182 212 248
EBIT Adj margin (%) 13 13,4 13,9
Pretax profit Adj 181 212 248
Net profit Adj 160 185 217
Net profit to shareholders Adj 160 185 217
Net Adj margin (%) 11,4 11,7 12,2
N/A N/A N/A
SEKm 2020 2021e 2022e
EBITDA 304 363 417
Net financial items -1 0 0
Paid tax -21 -26 -31
Non-cash items 0 0 0
Cash flow before change in WC 282 336 386
Change in WC -1 -4 -4
Operating cash flow 281 332 382
CAPEX tangible fixed assets -11 -13 -14
CAPEX intangible fixed assets -147 -167 -187
Acquisitions and disposals 0 0 0
Free cash flow 123 153 181
Dividend paid -23 -23 -23
Share issues and buybacks 0 0 0
Other non cash items -8 0 0
Decrease in net IB debt 80 119 146
Balance Sheet (SEKm) 2020 2021 2022
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 248 276 306
Tangible fixed assets 17 25 34
Other fixed assets 38 38 38
Fixed assets 323 359 398
Inventories 0 0 0
Receivables 14 14 14
Other current assets 123 145 168
Cash and liquid assets 233 351 498
Total assets 692 869 1077
Shareholders equity 546 731 948
Minority 0 0 0
Total equity 546 731 948
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 28 32 36
Other current liabilities 105 91 78
Total liabilities and equity 693 869 1076
Net IB debt -256 -374 -520
Net IB debt excl. pension debt -256 -374 -520
Capital invested 290 357 428
Working capital 4 36 68
EV breakdown 2020 2021 2022
Market cap. diluted (m) 3611 3611 3611
Net IB debt Adj -218 -337 -483
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 3393 3275 3128
Capital efficiency (%) 2020 2021 2022
Total assets turnover (%) 225,4 203,3 182,7
Capital invested turnover (%) 559 490,8 452,8
Capital employed turnover (%) 291,1 243 208,1
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 4 2,6 1,6
Payables / sales (%) 1,9 1,9 1,9
Working capital / sales (%) -1 1,3 2,9
Financial risk and debt service 2020 2021 2022
Net debt / equity (%) -46,8 -51,2 -54,9
Net debt / market cap (%) -12,2 -10,4 -14,4
Equity ratio (%) 78,8 84,2 88
Net IB debt adj. / equity (%) -40 -46 -50,9
Current ratio (%) 258,4 381,5 548,1
EBITDA / net interest (%) 49641,4 0 0
Net IB debt / EBITDA (%) -84,1 -103,1 -124,9
Interest cover (%) 0 0 0
N/A N/A N/A
SEKm 2020 2021e 2022e
Shares outstanding adj. 9 9 9
Fully diluted shares Adj 9 9 9
EPS 18,44 21,36 24,97
Dividend per share Adj 2,5 2,5 2,5
EPS Adj 18,44 21,36 24,97
BVPS 62,86 84,22 109,19
BVPS Adj 34,3 52,45 73,99
Net IB debt / share -29,4 -43,1 -60
Share price 240,82 416 416
Market cap. (m) 2091 3611 3611
Valuation 2020 2021 2022
P/E 22,6 19,5 16,7
EV/sales 2,43 2,06 1,76
EV/EBITDA 11,2 9 7,5
EV/EBITA 18,7 15,5 12,6
EV/EBIT 18,7 15,5 12,6
Dividend yield (%) 0,6 0,6 0,6
FCF yield (%) 3,4 4,2 5
P/BVPS 6,62 4,94 3,81
P/BVPS Adj 12,13 7,93 5,62
P/E Adj 22,6 19,5 16,7
EV/EBITDA Adj 11,2 9 7,5
EV/EBITA Adj 18,7 15,5 12,6
EV/EBIT Adj 18,7 15,5 12,6
EV/cap. employed 6,1 4,4 3,3
Investment ratios 2020 2021 2022
Capex / sales 11,3 11,3 11,3
Capex / depreciation 143,2 129,2 128
Capex tangibles / tangible fixed assets 65,5 51,2 41,8
Capex intangibles / definite intangibles 59,2 60,4 61,1
Depreciation on intangibles / definite intangibles 44,5 50,3 51,3
Depreciation on tangibles / tangibles 0 0 0
N/A N/A N/A

Equity research

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Media

G5 Entertainment - Company presentation with CEO Vlad Suglobov
G5 Entertainment - Company presentation with CFO Stefan Wikstrand (in English)

Main shareholders - G5 Entertainment

Main shareholders Share capital % Voting shares % Verified
Wide Development Ltd 6.6 % 6.8 % 31 Dec 2020
Purple Wolf Ltd 5.5 % 5.6 % 31 Dec 2020
Avanza Pension 4.8 % 5.0 % 20 Jan 2021
Tommy Svensk 4.4 % 4.5 % 31 Dec 2020
Proxima Ltd 4.1 % 4.2 % 31 Dec 2020
Swedbank Robur Fonder 3.5 % 3.6 % 31 Dec 2020
G5 Entertainment AB 5.0 % 2.5 % 31 Dec 2020
SPSW Capital 2.2 % 2.3 % 31 Oct 2020
Aktia Asset Management 2.0 % 2.0 % 31 Dec 2020
Daniel Eriksson 1.6 % 1.7 % 31 Dec 2020
Source: Holdings by Modular Finance AB

Insider list - G5 Entertainment

Name Quantity Code Date
Aleksandr Tabunov - 782 SELL 17 Dec 2020
Aleksandr Tabunov - 19 218 SELL 16 Dec 2020
Aleksandr Tabunov - 15 509 SELL 14 Dec 2020
Aleksandr Tabunov - 1 491 SELL 11 Dec 2020
Aleksandr Tabunov + 17 000 BUY 3 Dec 2020
Aleksandr Tabunov - 17 000 SELL 3 Dec 2020
Johanna Fagrell Köhler + 550 BUY 26 Nov 2020
Aleksandr Tabunov - 12 000 SELL 20 Nov 2020
Vladislav Suglobov - 10 000 SELL 20 Nov 2020
Vladislav Suglobov - 20 000 SELL 19 Nov 2020

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