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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 79 86
Sales growth (%) -32,6 -4,4 8,3
EBITDA 17 22 26
EBITDA margin (%) 20,6 28 30,8
EBIT adj -2 6 11
EBIT adj margin (%) -3 7 13,2
Pretax profit -9 3 11
EPS rep -0,11 0,03 0,11
EPS growth (%) 85 126,8 297,6
EPS adj -0,11 0,03 0,11
DPS 0 0 0
EV/EBITDA (x) 7,9 9,9 7,8
EV/EBIT adj (x) -54,5 39,8 18,2
P/E (x) -11,1 77,1 19,4
P/E adj (x) -11,1 77,1 19,4
EV/sales (x) 1,6 2,8 2,4
FCF yield (%) 30,1 4,7 8,2
Dividend yield (%) 0 0 0
Net IB debt/EBITDA 1,6 0,9 0,2
Lease adj. FCF yield (%) 27,5 3,3 6,8
Lease adj. ND/EBITDA 2 1 0,2
EURm 2020 2021e 2022e
Leasing payments -3 -3 -3
Sales 83 79 86
COGS -9 -4 -4
Gross profit 74 76 82
Other operating items -57 -53 -56
EBITDA 17 22 26
Depreciation on tangibles -2 -2 -4
Depreciation on intangibles -14 -12 -9
EBITA -2 6 11
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT -2 6 11
Other financial items 0 0 0
Net financial items -7 -2 0
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit -9 3 11
Tax 0 0 -1
Net profit -10 3 10
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -10 3 10
EPS -0,11 0,03 0,11
EPS Adj -0,11 0,03 0,11
Total extraordinary items after tax 0 0 0
Tax rate (%) 3,5 -15,9 -6,3
Gross margin (%) 88,8 95,3 95,7
EBITDA margin (%) 20,6 28 30,8
EBITA margin (%) -3 7 13,2
EBIT margin (%) -3 7 13,2
Pretax margin (%) -11,3 3,9 12,8
Net margin (%) -11,7 3,3 12
Growth rates Y/Y 2020 2021 2022
Sales growth (%) -32,6 -4,4 8,3
EBITDA growth (%) 156,9 30,3 19,2
EBIT growth (%) 95,5 323,3 104,6
Net profit growth (%) 85 126,8 297,6
EPS growth (%) 85 126,8 297,6
Profitability 2020 2021 2022
ROE (%) -75 53,1 91
ROE Adj (%) -75 53,1 91
ROCE (%) -9,5 14,9 31,4
ROCE Adj(%) -9,5 14,9 31,4
ROIC (%) -3,5 8,1 18,5
ROIC Adj (%) -3,5 8,1 18,5
Adj earnings numbers 2020 2021 2022
EBITDA Adj 17 22 26
EBITDA Adj margin (%) 20,6 28 30,8
EBITA Adj -2 6 11
EBITA Adj margin (%) -3 7 13,2
EBIT Adj -2 6 11
EBIT Adj margin (%) -3 7 13,2
Pretax profit Adj -9 3 11
Net profit Adj -10 3 10
Net profit to shareholders Adj -10 3 10
Net Adj margin (%) -11,7 3,3 12
Depreciation and amortisation -20 -17 -15
Of which leasing depreciation -3 -3 -3
EO items 0 0 0
Impairment and PPA amortisation 0 0 0
EBITDA lease Adj 14 19 24
EBITDA lease Adj margin (%) 17,2 24,5 27,5
EURm 2020 2021e 2022e
EBITDA 17 22 26
Net financial items -7 -2 0
Paid tax -10 3 10
Non-cash items 16 -3 -11
Cash flow before change in WC 17 19 25
Change in WC 1 -4 -2
Operating cash flow 18 15 24
CAPEX tangible fixed assets -2 -6 -7
CAPEX intangible fixed assets -7 0 0
Acquisitions and disposals 23 0 0
Free cash flow 32 9 16
Dividend paid 0 0 0
Share issues and buybacks 0 0 0
Other non cash items -8 -9 2
Decrease in net IB debt 29 8 15
Balance Sheet (EURm) 2020 2021 2022
Goodwill 16 16 16
Indefinite intangible assets 0 0 0
Definite intangible assets 33 35 26
Tangible fixed assets 0 0 0
Other fixed assets 17 17 18
Fixed assets 66 68 60
Inventories 0 0 0
Receivables 16 18 19
Other current assets 0 0 0
Cash and liquid assets 12 16 10
Total assets 93 101 89
Shareholders equity 4 6 17
Minority 0 0 0
Total equity 4 6 17
Long-term debt 36 36 0
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 2 2 2
Other long-term liabilities 21 32 31
Short-term debt 3 0 15
Accounts payable 27 25 25
Other current liabilities 0 0 0
Total liabilities and equity 93 101 89
Net IB debt 28 20 6
Net IB debt excl. pension debt 28 20 6
Capital invested 54 60 55
Working capital -12 -7 -6
EV breakdown 2020 2021 2022
Market cap. diluted (m) 107 200 200
Net IB debt Adj 28 20 6
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 135 221 206
Capital efficiency (%) 2020 2021 2022
Total assets turnover (%) 72,5 81,6 90,4
Capital invested turnover (%) 112,8 138,5 149,6
Capital employed turnover (%) 125,5 185,2 230,4
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 36,1 32,9 28,9
Working capital / sales (%) -13,3 -11,9 -7,5
Financial risk and debt service 2020 2021 2022
Net debt / equity (%) 775,1 329,2 35
Net debt / market cap (%) 46,5 10,2 2,9
Equity ratio (%) 3,9 6,1 18,6
Net IB debt adj. / equity (%) 775,1 329,2 35
Current ratio (%) 88,7 132,1 71,8
EBITDA / net interest (%) 247,7 905,4 8558,8
Net IB debt / EBITDA (%) 163,9 91,8 21,8
Interest cover (%) -205,2 194,2 1686,7
Lease liability amortisation -3 -3 -3
Other intangible assets 33 35 26
Right-of-use asset 0 0 0
Total other fixed assets 17 17 18
Leasing liability 0 0 0
Total other long-term liabilities 23 33 32
Net IB debt excl. leasing 28 20 6
Net IB debt / EBITDA lease Adj (%) 196,1 105 24,4
EURm 2020 2021e 2022e
Shares outstanding adj. 90 90 90
Fully diluted shares Adj 90 90 90
EPS -0,11 0,03 0,11
Dividend per share Adj 0 0 0
EPS Adj -0,11 0,03 0,11
BVPS 0,04 0,07 0,18
BVPS Adj -0,51 -0,5 -0,29
Net IB debt / share 0,3 0,2 0,1
Share price 0,67 2,22 2,22
Market cap. (m) 60 200 200
Valuation 2020 2021 2022
P/E -11,1 77,1 19,4
EV/sales 1,63 2,78 2,4
EV/EBITDA 7,9 9,9 7,8
EV/EBITA -54,5 39,8 18,2
EV/EBIT -54,5 39,8 18,2
Dividend yield (%) 0 0 0
FCF yield (%) 30,1 4,7 8,2
P/BVPS 29,75 32,36 12,12
P/BVPS Adj -2,35 -4,48 -7,79
P/E Adj -11,1 77,1 19,4
EV/EBITDA Adj 7,9 9,9 7,8
EV/EBITA Adj -54,5 39,8 18,2
EV/EBIT Adj -54,5 39,8 18,2
EV/cap. employed 3,1 5,2 6,4
Investment ratios 2020 2021 2022
Capex / sales 9,9 7,3 8,3
Capex / depreciation 49,2 41,9 57,9
Capex tangibles / tangible fixed assets 0 0 0
Capex intangibles / definite intangibles 19,9 0 0
Depreciation on intangibles / definite intangibles 43,4 33,3 33,3
Depreciation on tangibles / tangibles 0 0 0
Lease adj. FCF yield (%) 27,5 3,3 6,8

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Gaming Innovation Group - Company presentation with CEO Richard Brown
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
Andre Lavold 8.4 % 8.4 % 28 Feb 2021
Kjetil Myrlid Aasen 7.3 % 7.3 % 28 Feb 2021
Swedbank Robur Fonder 5.7 % 5.7 % 28 Feb 2021
Henrik Persson Ekdahl 5.4 % 5.4 % 28 Feb 2021
Hans Michael Hansen 4.5 % 4.5 % 28 Feb 2021
Egil Stenshagen 2.8 % 2.8 % 28 Feb 2021
G.F. Invest AS 2.6 % 2.6 % 28 Feb 2021
Per Grieg Jr 2.2 % 2.2 % 28 Feb 2021
Symmetry Invest A/S 2.2 % 2.2 % 28 Feb 2021
Jesper Ribacka 2.2 % 2.2 % 28 Feb 2021
Source: Holdings by Modular Finance AB

Insider list - Gaming Innovation Group

Name Quantity Code Date
Petter Nylander + 21 800 BUY 23 Feb 2021
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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