MGI – Media and Games Invest (XETRA: M8G)

Currency in EUR

Last close As at 20/09/2023

EUR1.41

0.22 (18.29%)

Market capitalisation

EUR190m

MGI – Media and Games Invest is an advertising software platform with strong first-party games content. It mainly operates in North America and Europe. Organic growth is supplemented with acquisitions and the group has bought more than 35 companies and assets in the past six years.

The digital advertising market continues to undergo significant changes, mostly driven by changing attitudes towards privacy. Where there is change, there is opportunity. The target addressable market is vast and there is a long runway until market share starts to become an issue for MGI. As the group builds scale, its increasing reach attracts greater numbers of software customers and a higher calibre of advertisers, with larger budgets.

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Sector

TMT

Equity Analyst

Fiona Orford-Williams

Fiona Orford-Williams

Director, TMT

Key Management

  • Paul Echt

    FD

  • Remco Westerman

    Executive Chairman

Balance Sheet

Forecast net debt (€m)

259.8

Forecast gearing ratio (%)

73

Share Price Performance

Price Performance
% 1M 3M 12M
Actual 27.1 (5.7) (48.5)
Relative 24.2 (7.6) (57.9)
52 week high/low €4.3/€1.4

Financials

MGI is building a strong position in the programmatic adtech sector, under the Verve name. Its supply (publishing) side is expanding its customer base in a difficult market, with Verve now the largest mobile in-app provider for Google in North America and EMEA and fourth largest on iOS. Verve’s demand (advertising) side is growing strongly, from a lower base. The group’s Q123 revenues were up by 1% (organic, +4% with currency), while lower costs from the slimmed-down games portfolio and the operational benefit of the combined tech stacks have lifted margins faster than we anticipated. The share price is at a sizable discount to peers. In our view, this does not reflect the value inherent in MGI’s large first-party data resource, AI-driven targeting or the scale of its opportunity. The group is holding a capital markets day alongside its interim results on 31 August.

Y/E Dec Revenue (€m) EBITDA (€m) PBT (€m) EPS (fd) (c) P/E (x) P/CF (x)
2021A 252.2 65.0 26.9 19.77 7.1 12.4
2022A 324.4 84.8 30.3 12.07 11.7 N/A
2023E 340.0 90.7 34.6 9.51 14.8 37.5
2024E 375.0 102.0 44.9 12.64 11.2 19.9