CI Games

WSE: CIG

Market CapPLN498m

Last Close PLN2.72

Founded in 2002, CI Games is a Warsaw-based developer and publisher of AA+/AAA multi-platform video games for a global audience. It specialises in first person shooter and action-driven titles and owns IP including the Sniper: Ghost Warrior (SGW) and Lords of the Fallen (LotF) franchises.

Investment summary

CI Games’ Q322 results reflect investments in its next major games release The Lords of the Fallen (TLotF) and the hiatus between releases. Its performance in the year to date has been driven by its back catalogue, resulting in year-on-year falls in revenue and profitability. However, margin compression in Q322 primarily relates to the group’s marketing push for the release of TLotF, which has been confirmed for FY23. Positive newsflow around TLotF gives us confidence in rapid sales growth and significant margin expansion in FY23. TLotF is the first in a line of new releases as part of the group’s new strategic roadmap for FY23–27, which will see an increase in the frequency of new releases and will provide greater consistency of performance year-on-year.

Y/E Dec	Revenue (PLNm)	EBITDA (PLNm)	PBT (PLNm)	EPS (fd) (gr)	P/E (x)	P/CF (x)
2020A	46.0	27.8	8.5	4.18	65.1	11.2
2021A	105.5	62.5	44.9	16.12	16.9	9.2
2022E	57.3	32.9	15.3	6.70	40.6	13.7
2023E	272.2	129.4	102.0	44.59	6.1	6.8

Industry outlook

Valuations in the games sector have come under significant pressure in 2022, with investors punishing anything less than a perfect performance with heavy markdowns from the sector’s 30x P/Es of 2021. In this context, CI Games’ low valuation means the shares have avoided the sector’s multiple compression in 2022, with the potential for material upside in 2023.

Last updated on 30/11/2022