Last close As at 05/08/2026
EUR1.37
▲ −0.02 (−1.37%)
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EUR274m
Research: TMT
MGI’s Q121 results showed an increasing benefit from the combination of media and games despite the easing impact of lockdown (higher margins, 38% organic growth), together with a significant contribution from the acquisitions of KingsIsle and LKQD (58% M&A-driven growth), delivering revenue growth of 96% y-o-y. Net interest-bearing debt increased to €97.6m at 31 March 2021 after MGI completed a €40m bond tap issue in March, sustainable as Q121 adj. EBITDA rose 127% y-o-y to €13.5m. Net debt/adj LTM EBITDA of 2.7x at 31 March 2021 (with KingsIsle only included in Q121) leaves scope for further selective M&A in FY21. At 12.6x consensus FY22 EV/adj EBITDA, MGI trades in line with its peers.
Written by
Media and Games Invest |
Full steam ahead, with two M&A deals in Q121
Software & computer services |
Scale research report - Flash
28 April 2021 |
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MGI’s Q121 results showed an increasing benefit from the combination of media and games despite the easing impact of lockdown (higher margins, 38% organic growth), together with a significant contribution from the acquisitions of KingsIsle and LKQD (58% M&A-driven growth), delivering revenue growth of 96% y-o-y. Net interest-bearing debt increased to €97.6m at 31 March 2021 after MGI completed a €40m bond tap issue in March, sustainable as Q121 adj. EBITDA rose 127% y-o-y to €13.5m. Net debt/adj LTM EBITDA of 2.7x at 31 March 2021 (with KingsIsle only included in Q121) leaves scope for further selective M&A in FY21. At 12.6x consensus FY22 EV/adj EBITDA, MGI trades in line with its peers.
Q121 results, lockdown benefit continues
Q121 net revenues increased 96% y-o-y to €51.9m (Q120: €26.5m). Adjusted EBITDA rose to €13.5m, up 127% y-o-y. Adj. EPS rose to €0.04, a 94% increase y-o-y. Net interest-bearing debt increased to €97.6m at 31 March 2021 (FY20: €61.6m), meaning that net debt/adj LTM EBITDA was 2.7x at 31 March 2021.
Media margins stronger, but Games leads the way
Despite a fairly even split of revenues, Media represented only 19% of adj EBITDA (Q121: €2.6m vs €10.9m), with Q121 adj. EBITDA margins of 11% versus 40% in Games, delivering a blended margin of 26%. Nevertheless, the media proposition remains integral to the investment case, delivering cheaper user acquisition, stronger monetisation and revenue diversification. Management anticipates a recovery in digital media sales later this year once the pandemic abates.
Growth on target, M&A remains in focus
MGI is already meeting management’s medium-term targets: revenue CAGR of 25–30% (Q121: 96% y-o-y, 46% annual CAGR over the past six years); 25–30% adjusted EBITDA margins (Q121: 26%); 15–20% EBIT margins (Q121: 18%); and 2–3x net leverage (Q121: 2.7x). MGI has invested aggressively in future growth, with a pipeline of launch titles including Heroes of Twilight and Skydome, among others. MGI is in discussions with five M&A targets (three games publishers and two demand-side platforms) with the potential to close in the next six months. MGI’s M&A focus has shifted from distressed acquisitions to value propositions, with a target acquisition multiple of up to 6x adj EBITDA, including synergies.
Valuation: In line with peers despite growth prospects
With multiple growth projects in the pipeline, MGI’s valuation is supported by continuing organic growth. M&A remains a fundamental part of the mix, with net debt of 2.0x FY21e adj EBITDA. At an FY22e P/E of 28.4x and an FY22e EV/adj. EBITDA of 12.6x, MGI trades in line with its peer group despite its strong growth.
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Consensus estimates
Source: MGI accounts (historical figures), Refinitiv consensus (forecasts). Note: *EBITDA adjusted for one-off M&A and financing costs. |
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Edison Investment Research provides qualitative research coverage on companies in the Deutsche Börse Scale segment in accordance with section 36 subsection 3 of the General Terms and Conditions of Deutsche Börse AG for the Regulated Unofficial Market (Freiverkehr) on Frankfurter Wertpapierbörse (as of 1 March 2017). Two to three research reports will be produced per year. Research reports do not contain Edison analyst financial forecasts.
Research: TMT
Reported results were comfortably above the baseline 1Spatial set out in its trading statement (see Ahead on all metrics). Given the COVID-19 backdrop, 1Spatial performed robustly in FY21 overall, particularly in H2, which saw growth return to Europe and US revenue accelerate to 45% y-o-y. Current trading is described as positive, with a growing pipeline and an ‘accelerated win rate’ evidenced by the recent slew of contract wins. We lift our FY22 EBITDA forecasts by 5%, resulting in a 20% rise in adjusted EPS, but see scope for further increases if the momentum continues.