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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 1356 1448 1651
Sales growth (%) 9,9 6,8 14
EBITDA 311 374 438
EBITDA margin (%) 23 25,8 26,5
EBIT adj 189 237 281
EBIT adj margin (%) 14 16,3 17
Pretax profit 189 237 281
EPS rep 19,29 23,88 28,33
EPS growth (%) 286,2 23,8 18,6
EPS adj 19,29 23,88 28,33
DPS 2,5 6,25 6,25
EV/EBITDA (x) 10,7 12,2 10,2
EV/EBIT adj (x) 17,6 19,3 15,8
P/E (x) 21 23,4 19,8
P/E adj (x) 21 23,4 19,8
EV/sales (x) 2,5 3,2 2,7
FCF yield (%) 4 3,2 4,1
Dividend yield (%) 0,6 1,1 1,1
Net IB debt/EBITDA -0,8 -1 -1,2
Lease adj. FCF yield (%) 3,7 3 3,8
Lease adj. ND/EBITDA -0,6 -0,8 -1
SEKm 2020 2021e 2022e
Sales 1356 1448 1651
COGS -570 -592 -670
Gross profit 786 856 981
Other operating items -475 -482 -543
EBITDA 311 374 438
Depreciation on tangibles 0 0 0
Depreciation on intangibles -110 -126 -145
EBITA 189 237 281
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 189 237 281
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 189 237 281
Tax -22 -30 -35
Net profit 167 207 246
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 167 207 246
EPS 19,29 23,88 28,33
EPS Adj 19,29 23,88 28,33
Total extraordinary items after tax 0 0 0
Tax rate (%) -11,4 -12,5 -12,5
Gross margin (%) 58 59,1 59,4
EBITDA margin (%) 23 25,8 26,5
EBITA margin (%) 14 16,3 17
EBIT margin (%) 14 16,3 17
Pretax margin (%) 13,9 16,3 17
Net margin (%) 12,3 14,3 14,9
Growth rates Y/Y 2020 2021 2022
Sales growth (%) 9,9 6,8 14
EBITDA growth (%) 87,8 20,3 16,9
EBIT growth (%) 265,5 24,9 18,6
Net profit growth (%) 269,5 23,8 18,6
EPS growth (%) 286,2 23,8 18,6
Profitability 2020 2021 2022
ROE (%) 40,9 38,7 32,2
ROE Adj (%) 40,9 38,7 32,2
ROCE (%) 45 43,7 36,5
ROCE Adj(%) 45 43,7 36,5
ROIC (%) 83,2 90,8 80,5
ROIC Adj (%) 83,2 90,8 80,5
Adj earnings numbers 2020 2021 2022
EBITDA Adj 311 374 438
EBITDA Adj margin (%) 23 25,8 26,5
EBITA Adj 189 237 281
EBITA Adj margin (%) 14 16,3 17
EBIT Adj 189 237 281
EBIT Adj margin (%) 14 16,3 17
Pretax profit Adj 189 237 281
Net profit Adj 167 207 246
Net profit to shareholders Adj 167 207 246
Net Adj margin (%) 12,3 14,3 14,9
Depreciation and amortisation -122 -138 -157
Of which leasing depreciation -12 -12 -12
EO items 0 0 0
Impairment and PPA amortisation 0 0 0
EBITDA lease Adj 302 362 426
EBITDA lease Adj margin (%) 22,2 25 25,8
Leasing payments -10 -12 -12
SEKm 2020 2021e 2022e
EBITDA 311 374 438
Net financial items -1 0 0
Paid tax -22 -30 -35
Non-cash items 0 0 0
Cash flow before change in WC 289 345 402
Change in WC 4 -2 -2
Operating cash flow 293 343 400
CAPEX tangible fixed assets -2 -12 -13
CAPEX intangible fixed assets -150 -174 -190
Acquisitions and disposals 0 0 0
Free cash flow 140 157 197
Dividend paid -22 -54 -54
Share issues and buybacks -66 0 0
Other non cash items 4 45 31
Decrease in net IB debt 65 136 162
Balance Sheet (SEKm) 2020 2021 2022
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 205 253 298
Tangible fixed assets 5 12 20
Other fixed assets 58 103 133
Fixed assets 278 377 461
Inventories 0 0 0
Receivables 12 12 12
Other current assets 115 133 165
Cash and liquid assets 188 280 411
Total assets 593 802 1049
Shareholders equity 432 639 884
Minority 0 0 0
Total equity 432 639 884
Long-term debt 0 0 0
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 1 0 0
Other long-term liabilities 0 0 0
Short-term debt 0 0 0
Accounts payable 13 14 17
Other current liabilities 142 142 142
Total liabilities and equity 593 802 1049
Net IB debt -240 -376 -537
Net IB debt excl. pension debt -240 -376 -537
Capital invested 193 263 347
Working capital -27 -12 19
EV breakdown 2020 2021 2022
Market cap. diluted (m) 3510 4851 4851
Net IB debt Adj -182 -273 -404
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 3328 4578 4447
Capital efficiency (%) 2020 2021 2022
Total assets turnover (%) 237,5 207,7 178,4
Capital invested turnover (%) 672,5 635,2 541
Capital employed turnover (%) 323,4 267,3 215
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 4,8 4,6 4
Payables / sales (%) 1,4 0,9 0,9
Working capital / sales (%) -2,2 -1,4 0,2
Financial risk and debt service 2020 2021 2022
Net debt / equity (%) -55,5 -58,8 -60,8
Net debt / market cap (%) -11,5 -7,7 -11,1
Equity ratio (%) 72,8 79,7 84,3
Net IB debt adj. / equity (%) -42,2 -42,8 -45,7
Current ratio (%) 198,4 263,6 360,8
EBITDA / net interest (%) 50844,4 0 0
Net IB debt / EBITDA (%) -77 -100,4 -122,8
Interest cover (%) 0 0 0
Lease liability amortisation -10 -12 -12
Other intangible assets 205 253 298
Right-of-use asset 11 11 11
Total other fixed assets 58 103 133
Leasing liability 6 6 6
Total other long-term liabilities 1 0 0
Net IB debt excl. leasing -188 -280 -411
Net IB debt / EBITDA lease Adj (%) -62,5 -77,2 -96,5
SEKm 2020 2021e 2022e
Shares outstanding adj. 9 9 9
Fully diluted shares Adj 9 9 9
EPS 19,29 23,88 28,33
Dividend per share Adj 2,5 6,3 6,3
EPS Adj 19,29 23,88 28,33
BVPS 49,8 73,68 102,01
BVPS Adj 26,2 44,52 67,65
Net IB debt / share -27,6 -43,3 -62
Share price 240,82 559,5 559,5
Market cap. (m) 2088 4851 4851
Valuation 2020 2021 2022
P/E 21 23,4 19,8
EV/sales 2,45 3,16 2,69
EV/EBITDA 10,7 12,2 10,2
EV/EBITA 17,6 19,3 15,8
EV/EBIT 17,6 19,3 15,8
Dividend yield (%) 0,6 1,1 1,1
FCF yield (%) 4 3,2 4,1
P/BVPS 8,13 7,59 5,48
P/BVPS Adj 15,45 12,57 8,27
P/E Adj 21 23,4 19,8
EV/EBITDA Adj 10,7 12,2 10,2
EV/EBITA Adj 17,6 19,3 15,8
EV/EBIT Adj 17,6 19,3 15,8
EV/cap. employed 7,6 7,1 5
Investment ratios 2020 2021 2022
Capex / sales 11,2 12,8 12,3
Capex / depreciation 138,9 147,6 140,2
Capex tangibles / tangible fixed assets 46,7 100 66,7
Capex intangibles / definite intangibles 73,4 68,7 63,7
Depreciation on intangibles / definite intangibles 53,7 49,7 48,6
Depreciation on tangibles / tangibles 0 0 0
Lease adj. FCF yield (%) 3,7 3 3,8

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 Mar 2021
Purple Wolf Ltd 5.5 % 5.6 % 31 Mar 2021
Tommy Svensk 4.4 % 4.5 % 31 Mar 2021
Avanza Pension 4.2 % 4.3 % 31 Mar 2021
Proxima Ltd 4.1 % 4.2 % 31 Dec 2020
Swedbank Robur Fonder 4.0 % 4.1 % 31 Mar 2021
SPSW Capital 3.9 % 4.0 % 31 Jan 2021
G5 Entertainment AB 5.9 % 3.5 % 31 Mar 2021
Argenta Asset Management SA 2.0 % 2.1 % 31 Mar 2021
Handelsbanken Liv Försäkring AB 1.7 % 1.7 % 31 Mar 2021
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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