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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 2019 2020e 2021e
Sales 123 76 61
Sales growth (%) -18,7 -37,8 -20,5
EBITDA -30 17 21
EBITDA margin (%) -24,4 22,1 33,8
EBIT adj -56 -5 -1
EBIT adj margin (%) -45,3 -7,2 -1
Pretax profit -64 -7 -3
EPS rep -0,72 -0,08 -0,04
EPS growth (%) -226,8 88,7 54
EPS adj -0,72 -0,08 -0,04
DPS 0 0 0
EV/EBITDA (x) -4,2 6,2 4,5
EV/EBIT adj (x) -2,3 -19,1 -159,4
P/E (x) -1,1 -9,2 -20
P/E adj (x) -1,1 -9,2 -20
EV/sales (x) 1 1,4 1,5
FCF yield (%) -5,9 64,7 20,7
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -1,9 2,2 1,3
EURm 2019 2020e 2021e
Sales 123 76 61
COGS -24 -8 -1
Gross profit 99 69 60
Other operating items -129 -52 -39
EBITDA -30 17 21
Depreciation on tangibles -26 -2 -3
Depreciation on intangibles 0 -17 -15
EBITA -56 -5 -1
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT -56 -5 -1
Other financial items -8 0 0
Net financial items -8 -1 -2
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit -64 -7 -3
Tax -1 -1 -1
Net profit -65 -7 -3
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -65 -7 -3
EPS -0,72 -0,08 -0,04
EPS Adj -0,72 -0,08 -0,04
Total extraordinary items after tax 0 0 0
Tax rate (%) 1 11,3 26,4
Gross margin (%) 80,4 90 98
EBITDA margin (%) -24,4 22,1 33,8
EBITA margin (%) -45,3 -7,2 -1
EBIT margin (%) -45,3 -7,2 -1
Pretax margin (%) -52,1 -8,6 -4,4
Net margin (%) -52,6 -9,5 -5,5
Growth rates Y/Y 2019 2020 2021
Sales growth (%) -18,7 -37,8 -20,5
EBITDA growth (%) -1175,9 156,4 21,5
EBIT growth (%) -223,6 90,2 89,3
Net profit growth (%) -228,4 88,7 54
EPS growth (%) -226,8 88,7 54
Profitability 2019 2020 2021
ROE (%) -117,3 -44 -36,3
ROE Adj (%) -117,3 -44 -36,3
ROCE (%) -52,9 -5,6 0,6
ROCE Adj(%) -52,9 -5,6 0,6
ROIC (%) -48,1 -7,4 -1,2
ROIC Adj (%) -48,1 -7,4 -1,2
Adj earnings numbers 2019 2020 2021
EBITDA Adj -30 17 21
EBITDA Adj margin (%) -24,4 22,1 33,8
EBITA Adj -56 -5 -1
EBITA Adj margin (%) -45,3 -7,2 -1
EBIT Adj -56 -5 -1
EBIT Adj margin (%) -45,3 -7,2 -1
Pretax profit Adj -64 -7 -3
Net profit Adj -65 -7 -3
Net profit to shareholders Adj -65 -7 -3
Net Adj margin (%) -52,6 -9,5 -5,5
EURm 2019 2020e 2021e
EBITDA -30 17 21
Net financial items -8 -1 -2
Paid tax -1 -7 -3
Non-cash items 41 16 3
Cash flow before change in WC 2 25 18
Change in WC 5 -5 1
Operating cash flow 7 19 19
CAPEX tangible fixed assets -12 -5 -5
CAPEX intangible fixed assets 0 -2 0
Acquisitions and disposals 0 31 0
Free cash flow -4 44 14
Dividend paid 0 0 0
Share issues and buybacks 0 0 0
Other non cash items -13 -30 2
Decrease in net IB debt -6 20 11
Balance Sheet (EURm) 2019 2020 2021
Goodwill 41 15 15
Indefinite intangible assets 0 0 0
Definite intangible assets 41 39 24
Tangible fixed assets 0 7 9
Other fixed assets 22 16 15
Fixed assets 103 77 63
Inventories 0 0 0
Receivables 22 21 25
Other current assets 0 0 0
Cash and liquid assets 10 9 21
Total assets 136 108 108
Shareholders equity 22 11 8
Minority 0 0 0
Total equity 22 11 8
Long-term debt 33 33 0
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 1 1
Other long-term liabilities 14 23 21
Short-term debt 34 0 33
Accounts payable 33 27 31
Other current liabilities 0 0 0
Total liabilities and equity 136 108 108
Net IB debt 57 37 26
Net IB debt excl. pension debt 57 37 26
Capital invested 93 72 56
Working capital -11 -5 -7
EV breakdown 2019 2020 2021
Market cap. diluted (m) 71 67 67
Net IB debt Adj 57 37 26
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 127 104 93
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 75,5 62,8 56,3
Capital invested turnover (%) 105,2 92,9 95
Capital employed turnover (%) 101,6 104,3 109
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 27,2 38,8 47,8
Working capital / sales (%) -6,6 -10,4 -9,9
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) 254,9 340,5 345,1
Net debt / market cap (%) 52,9 55,1 38,6
Equity ratio (%) 16,4 10,1 7
Net IB debt adj. / equity (%) 254,9 340,5 345,1
Current ratio (%) 48,6 106,7 67,9
EBITDA / net interest (%) 0 1568,9 992,6
Net IB debt / EBITDA (%) -189,1 219,4 126,3
Interest cover (%) N/A -164,4 10,6
EURm 2019 2020e 2021e
Shares outstanding adj. 90 90 90
Fully diluted shares Adj 90 90 90
EPS -0,72 -0,08 -0,04
Dividend per share Adj 0 0 0
EPS Adj -0,72 -0,08 -0,04
BVPS 0,25 0,12 0,08
BVPS Adj -0,66 -0,48 -0,35
Net IB debt / share 0,6 0,4 0,3
Share price 1,19 0,75 0,75
Market cap. (m) 107 67 67
Valuation 2019 2020 2021
P/E -1,1 -9,2 -20
EV/sales 1,03 1,36 1,53
EV/EBITDA -4,2 6,2 4,5
EV/EBITA -2,3 -19,1 -159,4
EV/EBIT -2,3 -19,1 -159,4
Dividend yield (%) 0 0 0
FCF yield (%) -5,9 64,7 20,7
P/BVPS 3,17 6,16 8,92
P/BVPS Adj -1,19 -1,57 -2,16
P/E Adj -1,1 -9,2 -20
EV/EBITDA Adj -4,2 6,2 4,5
EV/EBITA Adj -2,3 -19,1 -159,4
EV/EBIT Adj -2,3 -19,1 -159,4
EV/cap. employed 1,4 1,8 1,7
Investment ratios 2019 2020 2021
Capex / sales 9,5 8,7 8,8
Capex / depreciation 45,2 34,1 29,2
Capex tangibles / tangible fixed assets N/A 64,5 56,6
Capex intangibles / definite intangibles 0 5 0
Depreciation on intangibles / definite intangibles 0 44,5 63,9
Depreciation on tangibles / tangibles N/A 32,6 34,5

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Main shareholders - Gaming Innovation Group

Main shareholders Share capital % Voting shares % Verified
Andre Lavold 8.4 % 8.4 % 30 Jun 2020
Swedbank Robur Fonder 7.6 % 7.6 % 30 Jun 2020
Kjetil Myrlid Aasen 6.8 % 6.8 % 30 Jun 2020
Henrik Persson Ekdahl 5.4 % 5.4 % 30 Jun 2020
Hans Michael Hansen 5.2 % 5.2 % 30 Jun 2020
Super Innovative Limited (Robin Reed) 4.9 % 4.9 % 21 Nov 2019
Morten Hillestad 4.3 % 4.3 % 30 Jun 2020
Egil Stenshagen 2.8 % 2.8 % 30 Jun 2020
G.F. Invest AS 2.3 % 2.3 % 30 Jun 2020
Per Grieg Jr 2.2 % 2.2 % 30 Jun 2020
Source: Holdings by Modular Finance AB

Insider list - Gaming Innovation Group

Name Quantity Code Date
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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