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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 2019 2020e 2021e
Sales 1233 1420 1597
Sales growth (%) -15 15,2 12,5
EBITDA 166 284 312
EBITDA margin (%) 13,4 20 19,6
EBIT adj 52 152 157
EBIT adj margin (%) 4,2 10,7 9,9
Pretax profit 52 152 157
EPS rep 4,99 15,01 15,55
EPS growth (%) -65,2 200,6 3,6
EPS adj 4,99 15,01 15,55
DPS 2,5 2,5 2,5
EV/EBITDA (x) 4,7 12,2 10,8
EV/EBIT adj (x) 15 22,7 21,4
P/E (x) 20,2 27,6 26,6
P/E adj (x) 20,2 27,6 26,6
EV/sales (x) 0,6 2,4 2,1
FCF yield (%) 4,3 3,1 3,6
Dividend yield (%) 2,5 0,6 0,6
Net IB debt/EBITDA -1,1 -0,9 -1,1
N/A N/A N/A
SEKm 2019 2020e 2021e
Sales 1233 1420 1597
COGS -533 -608 -682
Gross profit 700 812 915
Other operating items -534 -528 -603
EBITDA 166 284 312
Depreciation on tangibles 0 0 0
Depreciation on intangibles -102 -120 -143
EBITA 52 152 157
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 52 152 157
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 52 152 157
Tax -7 -19 -20
Net profit 45 133 138
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 45 133 138
EPS 4,99 15,01 15,55
EPS Adj 4,99 15,01 15,55
Total extraordinary items after tax 0 0 0
Tax rate (%) -12,9 -12,5 -12,5
Gross margin (%) 56,8 57,2 57,3
EBITDA margin (%) 13,4 20 19,6
EBITA margin (%) 4,2 10,7 9,9
EBIT margin (%) 4,2 10,7 9,9
Pretax margin (%) 4,2 10,7 9,9
Net margin (%) 3,7 9,4 8,6
Growth rates Y/Y 2019 2020 2021
Sales growth (%) -15 15,2 12,5
EBITDA growth (%) -30,1 71,3 10
EBIT growth (%) -63,9 194 3,4
Net profit growth (%) -64,9 193,8 3,6
EPS growth (%) -65,2 200,6 3,6
Profitability 2019 2020 2021
ROE (%) 12,3 29,4 23,5
ROE Adj (%) 12,3 29,4 23,5
ROCE (%) 13,9 32,6 26,1
ROCE Adj(%) 13,9 32,6 26,1
ROIC (%) 25,4 55 46,9
ROIC Adj (%) 25,4 55 46,9
Adj earnings numbers 2019 2020 2021
EBITDA Adj 166 284 312
EBITDA Adj margin (%) 13,4 20 19,6
EBITA Adj 52 152 157
EBITA Adj margin (%) 4,2 10,7 9,9
EBIT Adj 52 152 157
EBIT Adj margin (%) 4,2 10,7 9,9
Pretax profit Adj 52 152 157
Net profit Adj 45 133 138
Net profit to shareholders Adj 45 133 138
Net Adj margin (%) 3,7 9,4 8,6
N/A N/A N/A
SEKm 2019 2020e 2021e
EBITDA 166 284 312
Net financial items 0 0 0
Paid tax -7 -19 -20
Non-cash items 0 0 0
Cash flow before change in WC 159 265 293
Change in WC 4 -2 -4
Operating cash flow 163 263 289
CAPEX tangible fixed assets -8 -11 -13
CAPEX intangible fixed assets -116 -139 -144
Acquisitions and disposals 0 0 0
Free cash flow 39 112 133
Dividend paid -22 -23 -23
Share issues and buybacks 0 0 0
Other non cash items -19 -8 0
Decrease in net IB debt -28 70 98
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 211 231 232
Tangible fixed assets 11 17 25
Other fixed assets 38 38 38
Fixed assets 280 306 315
Inventories 0 0 0
Receivables 14 14 14
Other current assets 102 125 146
Cash and liquid assets 152 222 320
Total assets 548 667 795
Shareholders equity 386 519 656
Minority 0 0 0
Total equity 386 519 656
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 27 28 32
Other current liabilities 121 105 92
Total liabilities and equity 548 667 795
Net IB debt -175 -245 -343
Net IB debt excl. pension debt -175 -245 -343
Capital invested 210 274 314
Working capital -32 5 36
EV breakdown 2019 2020 2021
Market cap. diluted (m) 916 3667 3667
Net IB debt Adj -138 -207 -305
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 779 3460 3362
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 228 233,7 218,6
Capital invested turnover (%) 694,6 586,5 544
Capital employed turnover (%) 329,8 304,2 265,3
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 6 4 2,6
Payables / sales (%) 2,1 1,9 1,9
Working capital / sales (%) -3,9 -1 1,3
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -45,4 -47,2 -52,2
Net debt / market cap (%) -18,2 -6,7 -9,3
Equity ratio (%) 70,3 77,8 82,6
Net IB debt adj. / equity (%) -35,7 -40 -46,5
Current ratio (%) 169 250,2 357,7
EBITDA / net interest (%) -138096,7 97912,7 0
Net IB debt / EBITDA (%) -105,7 -86,2 -109,7
Interest cover (%) 0 0 0
N/A N/A N/A
SEKm 2019 2020e 2021e
Shares outstanding adj. 9 9 9
Fully diluted shares Adj 9 9 9
EPS 4,99 15,01 15,55
Dividend per share Adj 2,5 2,5 2,5
EPS Adj 4,99 15,01 15,55
BVPS 42,88 58,54 74,1
BVPS Adj 19,37 32,47 47,93
Net IB debt / share -19,5 -27,6 -38,7
Share price 106,74 414 414
Market cap. (m) 960 3667 3667
Valuation 2019 2020 2021
P/E 20,2 27,6 26,6
EV/sales 0,63 2,44 2,1
EV/EBITDA 4,7 12,2 10,8
EV/EBITA 15 22,7 21,4
EV/EBIT 15 22,7 21,4
Dividend yield (%) 2,5 0,6 0,6
FCF yield (%) 4,3 3,1 3,6
P/BVPS 2,36 7,07 5,59
P/BVPS Adj 5,22 12,75 8,64
P/E Adj 20,2 27,6 26,6
EV/EBITDA Adj 4,7 12,2 10,8
EV/EBITA Adj 15 22,7 21,4
EV/EBIT Adj 15 22,7 21,4
EV/cap. employed 1,9 6,5 5
Investment ratios 2019 2020 2021
Capex / sales 10,1 10,6 9,8
Capex / depreciation 122,1 125,8 109,5
Capex tangibles / tangible fixed assets 77,2 65,8 51
Capex intangibles / definite intangibles 54,9 60,3 62
Depreciation on intangibles / definite intangibles 48,2 51,8 61,7
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 CFO Stefan Wikstrand (in English)
G5 Entertainment - Interview with CFO Stefan Wikstrand (in Swedish)

Main shareholders - G5 Entertainment

Main shareholders Share capital % Voting shares % Verified
Wide Development Ltd 7.4 % 7.6 % 30 Sep 2020
Purple Wolf Ltd 5.8 % 6.0 % 30 Sep 2020
Tommy Svensk 4.4 % 4.5 % 30 Sep 2020
Avanza Pension 4.2 % 4.3 % 30 Sep 2020
Proxima Ltd 4.2 % 4.3 % 30 Sep 2020
SPSW Capital 3.3 % 3.4 % 31 Jul 2020
Aktia Asset Management 3.3 % 3.4 % 30 Sep 2020
Swedbank Robur Fonder 2.6 % 2.7 % 30 Sep 2020
G5 Entertainment AB 4.7 % 2.2 % 30 Sep 2020
Daniel Eriksson 1.6 % 1.7 % 30 Sep 2020
Source: Holdings by Modular Finance AB

Insider list - G5 Entertainment

Name Quantity Code Date
Stefan Lundborg + 5 000 BUY 4 Sep 2020
Marcus Segal + 500 BUY 20 Aug 2020
Vladislav Suglobov + 10 000 BUY 2 Jun 2020
Vladislav Suglobov + 10 000 BUY 6 May 2020
Vladislav Suglobov + 10 000 BUY 5 May 2020
Vladislav Suglobov + 5 000 BUY 10 Mar 2020
Vladislav Suglobov + 10 000 BUY 9 Mar 2020
Vladislav Suglobov + 10 000 BUY 13 Jan 2020
Vladislav Suglobov + 107 BUY 13 Jan 2020
Aleksandr Tabunov - 17 000 SELL 2 Oct 2019

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