Game Digital

LN: GMD

£46m market cap

26.6p last close

Game Digital is the leading multichannel specialist retailer of video games in the UK and Spain, with 274 stores in the UK, 265 stores in Spain and over 30% market share.

Investment summary

Game Digital’s (GMD’s) core retail business performed well in a challenging market, with material planned cost savings absorbing an anticipated 1.4% decline in gross transaction value (GTV) and helping to deliver H119 EBITDA growth of 22%. We reduce our FY19 and FY20 EBITDA forecasts by c 8%, primarily reflecting current market headwinds and a shift in BELONG arena openings into subsequent years. The current share price represents a significant discount to our valuation of 69p.

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 1.0
2018A 782.3 10.1 (3.5) (3.7) N/A 15.1
2019E 778.4 12.2 (2.2) (2.8) N/A 5.1
2020E 813.8 16.6 (1.2) (2.1) N/A 5.7
Last updated on 19/03/2019
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 19/03/2019
Sector
Consumer
Share price graph
Balance sheet
Forecast net cash (£m) 52.1
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 9.0 13.9 (19.4)
Relative* 7.7 4.3 (20.3)
52-week high/low 43.1p/21.9p
*% relative to local index
Key management
John E. Jackson Chairman
Martyn Gibbs CEO

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