Original-Research: Media and Games Invest SE (von GBC AG): BUY

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Original-Research: Media and Games Invest SE - von GBC AG

Einstufung von GBC AG zu Media and Games Invest SE

Unternehmen: Media and Games Invest SE
ISIN: SE0018538068

Anlass der Studie: Research study (Note)
Empfehlung: BUY
Kursziel: 4.05 EUR
Letzte Ratingänderung: 
Analyst: Marcel Goldmann, Cosmin Filker

HY1 2023: Solid sales development despite economic headwinds; stable
operating earnings development due to strict cost management; GBC estimates
and price target adjusted after guidance reduction
 
Business development in HY1 2023
 
Media and Games Invest SE (MGI) published its half-year figures for the
current financial year on 31 August 2023. Based on this, the ad tech
platform group achieved a stable revenue development in the first six
months despite an economic headwind that led to a weakening of the
advertising industry. Compared to the same period last year, digital group
revenues increased slightly by around 1.0% to EUR 144.93 million (HY1 2022: EUR
143.93 million). This revenue growth was achieved despite past divestments
(streamlining of the gaming portfolio) and an unfavourable exchange rate
development.
 
Both advertising segments (Demand Side Platforms - DSP, Supply Side
Platforms - SSP) contributed to the robust Group revenue development with
stable or growing segment revenue development. In the first half of the
year, the SSP business segment was able to confirm the high half-year
revenue level of the previous year (HY1 2022: EUR 131.62 million) with
segment revenue of EUR 130.84 million. In contrast, the DSP business unit
even increased its segment revenue significantly by 14.5% to EUR 14.10
million (HY1 2022: EUR 12.31 million) compared to the same period of the
previous year.
 
In parallel to the stable revenue development, the consolidated operating
result (EBITDA) increased slightly by 1.4% to EUR 37.41 million (HY1 2022: EUR
36.91 million) compared to the same period of the previous year. Adjusted
for one-off costs and special effects (e.g. M&A costs), adjusted EBITDA
(Adj. EBITDA) for the first half of 2023 amounted to EUR 40.40 million, which
increased moderately by 4.6% compared to the same period of the previous
year (HY1 2022: EUR 38.60 million). At the same time, the adjusted EBITDA
margin increased slightly to 27.9% (HY1 2022: 26.8%).
 
On the net level, however, MGI suffered a 54.0% year-on-year decline in net
income (after minorities) to EUR 2.57 million in the first six months of the
current financial year (HY1 2022: EUR 5.59 million). This was mainly due to
higher tax and interest charges compared to the same period of the previous
year.
 
Business development in Q2 2023
 
The stable revenue development of the MGI Group is also evident at the
quarterly level. Despite difficult general conditions, the Group's revenue
remained at a high level in the second quarter with a revenue volume of EUR
76.18 million compared to the same quarter of the previous year (Q2 2022: EUR
78.06 million). Adjusted for currency effects, organic revenue growth in
the second quarter was 1.0% compared to the same quarter of the previous
year. Excluding divestment and currency effects, an adjusted increase in
turnover of 3.0% was even achieved.
 
According to the company, the technology company also succeeded in the past
quarter in further increasing its market share and thus expanding its
market position through innovative AI-based targeting products such as
Moments.AI, which significantly improve advertising results for publishers
and advertisers. MGI's strong market position is also reflected in the top
rankings achieved by various market segments. While MGI was already the
leading provider of in-app advertising on Android, the technology company
has also managed to be the leading provider on Apple's IOS in North America
and Europe since Q2 2023.
 
The robust (organic) business development in Q2 was supported in particular
by a renewed increase in software customers and advertising volume (ad
impressions). Compared to the previous year, ad impressions increased
significantly by 13.0% and the number of software clients also increased
significantly by 9.0%. Thus, the software client base (so-called total
software clients with an annual turnover of more than USD 100,000) was
expanded by 46 new software clients in the second quarter compared to the
same quarter of the previous year to a total of 559 (Q2 2022: 513).
 
At segment level, the previously smaller Demand Side Segment (DSP) was able
to further expand its digital business volume with a slight year-on-year
revenue increase of 2.3% to EUR 7.88 million (Q2 2022: EUR 7.70 million). In
contrast, the Supply-Side segment suffered a slight year-on-year decline in
segment revenue of 3.0% to EUR 68.30 million (Q2 2022: EUR 70.36 million), due
in particular to the divestments of small non-strategic games made in Q4
2022.
 
At the operating earnings level, MGI achieved an EBITDA of EUR 19.99 million
in the second quarter of 2023, which was almost at the previous year's
level (Q2 2022: EUR 20.04 million), in parallel with the solid revenue
development. In contrast, Group EBITDA adjusted for one-off and special
effects (e.g. M&A costs or headquarters relocation costs) increased
slightly by around 1.0% to EUR 21.30 million (Q2 2022: EUR 21.10 million). In
the same step, the adjusted EBITDA margin grew to 28.0% (Q2 2022: 27.0%).
The increased profitability also underlines the company's general strict
cost management.
 
Forecasts and evaluation
 
In order to further improve their earnings situation and to counteract
their lower growth dynamics, MGI has initiated a cost-saving programme in
the current third quarter. This cost-optimisation programme, which is
primarily aimed at reducing personnel costs, includes annual cost savings
of EUR 10.0 million. The main effects of the planned cost reduction measures
are expected to take effect from the fourth quarter of 2024.
 
Against the backdrop of the weakening advertising market and the lower
growth expected by MGI in the second half of 2023, the technology company
has reduced its previous corporate guidance (revenue of EUR 335.0 million to
EUR 345.0 million and Adj. EBITDA of EUR 95.0 million to EUR 105.0 million) for
the current financial year. The company now expects consolidated revenue of
approximately EUR 303.0 million and Adj. EBITDA of EUR 93.0 million.
 
In the context of the publication of the Q2 and half-year figures at the
'MGI Capital Markets Day 2023', the technology company confirmed its
medium-term corporate guidance (revenue CAGR: 25.0% to 30.0%; Adj. EBITDA
margin: 25.0% to 30.0%). Accordingly, the technology company expects higher
growth momentum again in the medium term.
 
In view of the lowered corporate guidance, we have also adjusted our
previous turnover and earnings forecasts for the current financial year and
the following years downwards. For the current financial year, we now
expect consolidated revenue of EUR 303.21 million (previously: EUR 340.12
million) and EBITDA of EUR 85.37 million (previously: EUR 89.44 million). With
regard to the subsequent years 2024 and 2025, we expect, under conservative
premises, a turnover (EBITDA) of EUR 324.74 million (EUR 95.56 million) and EUR
357.66 million (EUR 108.49 million) respectively.
 
Despite our reduced revenue and earnings estimates, the MGI Group should be
able to return to its growth path from the 2024 financial year onwards,
based on the gradual recovery of the advertising market that we expect. In
particular, the strong positioning of the ad tech company in the
programmatic advertising market, the fastest-growing segment of the digital
advertising market, should ensure further gains in market share and
outperformance compared to the overall advertising market in the future.
Our forecast EBITDA growth for the future financial years should also be
boosted by the expected positive effects from the company's initiated
cost-efficiency programme (targeted annual cost savings of EUR 10.0 million
from FY 2024).
 
Against the backdrop of our adjusted revenue and earnings forecasts, we are
lowering our previous price target to EUR 4.05 (previously: EUR 5.30) per
share. In view of the current share price level, we continue to give the
MGI share a 'buy' rating and continue to see significant upside potential.
 

Die vollständige Analyse können Sie hier downloaden:
http://www.more-ir.de/d/27697.pdf

Kontakt für Rückfragen
GBC AG
Halderstrasse 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR. Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,7,11); Einen Katalog möglicher Interessenkonflikte finden Sie unter: http://www.gbc-ag.de/de/Offenlegung

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Date (time) of completion: 11/09/2023 (8:59 am)
Date (time) of first distribution: 11/09/2023 (10:30 am)

-------------------übermittelt durch die EQS Group AG.-------------------


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