Game Digital

LN: GMD

£41.9m market cap

24.2p last close

Game Digital is the leading multichannel specialist retailer of video games in the UK and Spain, with 276 stores in the UK, 267 stores in Spain and over 30% market share.

Investment summary

Despite UK retail headwinds, GMD performed solidly over the peak seven weeks to 5 January. Like-for-like sales strengthened to +2%, driven by +4.8% in Spain, while the UK remained flat. GMD’s strong relationships with publishers, with exclusive content in software releases, helped trading margin over the peak period, as did licensed merchandise and accessories, combined with a disciplined approach to discounting. The roll-out of BELONG remains a key strategic objective. The market values GMD’s shares at less than net cash of 33p per share, while we value them at 67p.

Y/E Jul
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2017A 782.9 8.0 (4.3) (3.7) N/A 0.9
2018A 782.3 10.1 (3.5) (3.7) N/A 13.8
2019E 778.4 12.2 (2.2) (2.8) N/A 4.6
2020E 813.8 16.6 (1.2) (2.1) N/A 5.2
Last updated on 19/02/2019
Industry outlook

The UK and Spanish console markets (hardware, software, accessories and console digital) are worth c US$2.2bn and US$1.2bn, respectively. The traditional cycle that has peaked every six years since 2000 seems to be moving to shorter intervals. This could signal structural changes analogous to the mobile and PC markets. In addition, the global esports market, currently US$0.9bn, is forecast to grow to US$1.7bn by 2021.

Last updated on 19/02/2019
Sector
Consumer
Share price graph
Balance sheet
Forecast net cash (£m) 52.1
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (13.6) (16.1) (31.6)
Relative* (15.9) (18.2) (30.7)
52-week high/low 43.1p/22.0p
*% relative to local index
Key management
John E. Jackson Chairman
Martyn Gibbs CEO

Content on Game Digital