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Gaming Innovation Group

Gaming Innovation Group

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Casino and sports betting services

GIG is a young company that sells products to a large part of the online gambling value chain. It sells marketing services to other gambling operators and sells its own software platform and sportsbook to other B2C operators, as well as land-based casinos, enabling them to offer casino and sports betting services. GIG’s footprint is in Western Europe, but it also has US exposure through selling B2B services.

GIG’s opportunity within its B2B platform and affiliate business is to expand the operations by increasing the geographic footprint. Furthermore, there are M&A opportunities present in the affiliate segment.

We view GIG as a high-risk business case due to the inherent nature of the business and the current financial profile. We sew regulatory risks (could face litigation if it fails to comply with local laws and practices in the regions where it operates) and counterparty risk (faces many counterparties, and some customers on the B2B side are smaller firms with low levels of solidity). We also note that GIG is exposed to financial risk as it has a long-term bond due in June 2022 coupled with a commitment (through its bond agreement) to deliver break-even EBITDA in its sportsbook by Q3 2020e.

Financials

EURm 2020 2021e 2022e
Sales 83 78 82
Sales growth (%) -32,3 -6,6 5
EBITDA 16 22 24
EBITDA margin (%) 19,8 27,9 29,1
EBIT adj -3 5 8
EBIT adj margin (%) -4,1 6 10,2
Pretax profit -8 2 8
EPS rep -0,09 0,02 0,08
EPS growth (%) 87,4 120,6 349,6
EPS adj -0,09 0,02 0,08
DPS 0 0 0
EV/EBITDA (x) 9,5 6,7 5,5
EV/EBIT adj (x) -46,2 31,3 15,8
P/E (x) -14,2 68,9 15,3
P/E adj (x) -14,2 68,9 15,3
EV/sales (x) 1,9 1,9 1,6
FCF yield (%) 32,4 11,4 14,1
Dividend yield (%) 0 0 0
Net IB debt/EBITDA 2,5 1,4 0,7
N/A N/A N/A
EURm 2020 2021e 2022e
Sales 83 78 82
COGS -9 -4 -4
Gross profit 74 74 77
Other operating items -57 -52 -54
EBITDA 16 22 24
Depreciation on tangibles -2 -3 -4
Depreciation on intangibles -15 -11 -8
EBITA -3 5 8
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT -3 5 8
Other financial items 0 0 0
Net financial items -4 -2 0
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit -8 2 8
Tax -1 -1 -1
Net profit -8 2 8
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -8 2 8
EPS -0,09 0,02 0,08
EPS Adj -0,09 0,02 0,08
Total extraordinary items after tax 0 0 0
Tax rate (%) 7 -29,4 -8,5
Gross margin (%) 88,8 95 95
EBITDA margin (%) 19,8 27,9 29,1
EBITA margin (%) -4,1 6 10,2
EBIT margin (%) -4,1 6 10,2
Pretax margin (%) -9,1 3,1 10,1
Net margin (%) -9,8 2,2 9,2
Growth rates Y/Y 2020 2021 2022
Sales growth (%) -32,3 -6,6 5
EBITDA growth (%) 155 31,6 9,4
EBIT growth (%) 93,9 236,6 79,6
Net profit growth (%) 87,4 120,6 349,6
EPS growth (%) 87,4 120,6 349,6
Profitability 2020 2021 2022
ROE (%) -51,1 16,2 50,4
ROE Adj (%) -51,1 16,2 50,4
ROCE (%) -9 9,3 17,4
ROCE Adj(%) -9 9,3 17,4
ROIC (%) -4,4 4,9 13,1
ROIC Adj (%) -4,4 4,9 13,1
Adj earnings numbers 2020 2021 2022
EBITDA Adj 16 22 24
EBITDA Adj margin (%) 19,8 27,9 29,1
EBITA Adj -3 5 8
EBITA Adj margin (%) -4,1 6 10,2
EBIT Adj -3 5 8
EBIT Adj margin (%) -4,1 6 10,2
Pretax profit Adj -8 2 8
Net profit Adj -8 2 8
Net profit to shareholders Adj -8 2 8
Net Adj margin (%) -9,8 2,2 9,2
N/A N/A N/A
EURm 2020 2021e 2022e
EBITDA 16 22 24
Net financial items -4 -2 0
Paid tax -8 2 8
Non-cash items 20 -6 -8
Cash flow before change in WC 24 15 23
Change in WC 1 4 1
Operating cash flow 24 19 24
CAPEX tangible fixed assets -4 -6 -7
CAPEX intangible fixed assets -5 0 0
Acquisitions and disposals 22 0 0
Free cash flow 37 13 16
Dividend paid 0 0 0
Share issues and buybacks 0 0 0
Other non cash items -23 -1 2
Decrease in net IB debt 16 12 13
Balance Sheet (EURm) 2020 2021 2022
Goodwill 15 15 15
Indefinite intangible assets 0 0 0
Definite intangible assets 44 33 25
Tangible fixed assets 7 10 13
Other fixed assets 17 19 17
Fixed assets 84 77 70
Inventories 0 0 0
Receivables 23 22 23
Other current assets 0 0 0
Cash and liquid assets 7 17 8
Total assets 114 116 100
Shareholders equity 10 11 19
Minority 0 0 0
Total equity 10 11 19
Long-term debt 33 0 0
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 1 1 1
Other long-term liabilities 17 20 18
Short-term debt 1 33 10
Accounts payable 34 37 38
Other current liabilities 0 0 0
Total liabilities and equity 111 116 100
Net IB debt 41 29 16
Net IB debt excl. pension debt 41 29 16
Capital invested 73 62 54
Working capital -11 -15 -16
EV breakdown 2020 2021 2022
Market cap. diluted (m) 116 116 116
Net IB debt Adj 41 29 16
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 157 145 131
Capital efficiency (%) 2020 2021 2022
Total assets turnover (%) 66,7 67,7 75,6
Capital invested turnover (%) 100,7 115,4 140,3
Capital employed turnover (%) 113,6 135 163,3
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 40,3 45,7 45,9
Working capital / sales (%) -13 -16,7 -18,6
Financial risk and debt service 2020 2021 2022
Net debt / equity (%) 429,4 262,7 85
Net debt / market cap (%) 68,4 25,4 13,8
Equity ratio (%) 8,4 9,7 18,7
Net IB debt adj. / equity (%) 429,4 262,7 85
Current ratio (%) 79,2 54,1 60,1
EBITDA / net interest (%) 390,8 961,7 29730,6
Net IB debt / EBITDA (%) 249,3 135,6 67,1
Interest cover (%) -653,1 180 1931,2
N/A N/A N/A
EURm 2020 2021e 2022e
Shares outstanding adj. 90 90 90
Fully diluted shares Adj 90 90 90
EPS -0,09 0,02 0,08
Dividend per share Adj 0 0 0
EPS Adj -0,09 0,02 0,08
BVPS 0,11 0,12 0,21
BVPS Adj -0,55 -0,41 -0,24
Net IB debt / share 0,5 0,3 0,2
Share price 0,67 1,28 1,28
Market cap. (m) 60 116 116
Valuation 2020 2021 2022
P/E -14,2 68,9 15,3
EV/sales 1,88 1,86 1,61
EV/EBITDA 9,5 6,7 5,5
EV/EBITA -46,2 31,3 15,8
EV/EBIT -46,2 31,3 15,8
Dividend yield (%) 0 0 0
FCF yield (%) 32,4 11,4 14,1
P/BVPS 12,07 10,32 6,17
P/BVPS Adj -2,33 -3,12 -5,45
P/E Adj -14,2 68,9 15,3
EV/EBITDA Adj 9,5 6,7 5,5
EV/EBITA Adj -46,2 31,3 15,8
EV/EBIT Adj -46,2 31,3 15,8
EV/cap. employed 2,7 2,5 3,1
Investment ratios 2020 2021 2022
Capex / sales 11,1 7,5 9,1
Capex / depreciation 54,3 40,9 58,6
Capex tangibles / tangible fixed assets 62,7 60,6 58,2
Capex intangibles / definite intangibles 11 0 0
Depreciation on intangibles / definite intangibles 33,3 33,3 33,3
Depreciation on tangibles / tangibles 34,2 33,5 34,1
N/A N/A N/A

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Media

Gaming Innovation Group - Company presentation with CEO Richard Brown

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Main shareholders - Gaming Innovation Group

Main shareholders Share capital % Voting shares % Verified
Kjetil Myrlid Aasen 8.9 % 8.9 % 31 Dec 2020
Andre Lavold 8.4 % 8.4 % 31 Dec 2020
Swedbank Robur Fonder 6.1 % 6.1 % 30 Nov 2020
Henrik Persson Ekdahl 5.4 % 5.4 % 31 Dec 2020
Hans Michael Hansen 4.8 % 4.8 % 31 Dec 2020
Egil Stenshagen 2.8 % 2.8 % 31 Dec 2020
G.F. Invest AS 2.6 % 2.6 % 31 Dec 2020
Symmetry Invest A/S 2.6 % 2.6 % 31 Dec 2020
Per Grieg Jr 2.2 % 2.2 % 31 Dec 2020
Ben Clemes 2.1 % 2.1 % 5 Jan 2021
Source: Holdings by Modular Finance AB

Insider list - Gaming Innovation Group

Name Quantity Code Date
Henrik Persson Ekdahl -4 869 325 SELL 22 Dec 2020
True Value Ltd +4 896 125 BUY 22 Dec 2020
Henrik Persson Ekdahl -4 896 125 SELL 22 Dec 2020
True Value Ltd +4 869 325 BUY 22 Dec 2020
Henrik Persson Ekdahl + 200 000 BUY 20 Feb 2020
Henrik Persson Ekdahl + 55 000 BUY 5 Sep 2019
Henrik Persson Ekdahl + 91 743 BUY 14 Aug 2019

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