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Currency in PLN
Last close As at 26/05/2023
PLN4.81
▲ −0.41 (−7.85%)
Market capitalisation
PLN880m
Research: TMT
In its Q321 trading update, CI Games confirmed strong Q321 revenues of c PLN30.2m and PAT of c PLN9.8m, a 32.5% net margin. Q4 is CI Games’ seasonally strongest quarter, so we anticipate Q421 trading to be similar to Q321. We have therefore raised our FY21 estimates, with FY21 revenues rising 12% to PLN105.0m, and a 32.5% margin giving reported PAT of PLN34.1m. CI Games also announced a new survival game for the PC and latest console generations on Unreal Engine 5 by Czech games developer, BatFields. The IP is to be owned by CI Games. We see this as a positive and necessary step as CI Games invests in broadening its games portfolio, forming the group’s third franchise if the title is successful. As outlined in our recent initiation, An emerging European game publisher, timely delivery of high-quality titles is critical to the investment case.
CI Games |
Strong Q321 update, third title in development |
Q321 trading update |
Video games |
27 October 2021 |
Share price performance
Business description
Next events
Analysts
CI Games is a research client of Edison Investment Research Limited |
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In its Q321 trading update, CI Games confirmed strong Q321 revenues of c PLN30.2m and PAT of c PLN9.8m, a 32.5% net margin. Q4 is CI Games’ seasonally strongest quarter, so we anticipate Q421 trading to be similar to Q321. We have therefore raised our FY21 estimates, with FY21 revenues rising 12% to PLN105.0m, and a 32.5% margin giving reported PAT of PLN34.1m. CI Games also announced a new survival game for the PC and latest console generations on Unreal Engine 5 by Czech games developer, BatFields. The IP is to be owned by CI Games. We see this as a positive and necessary step as CI Games invests in broadening its games portfolio, forming the group’s third franchise if the title is successful. As outlined in our recent initiation, An emerging European game publisher, timely delivery of high-quality titles is critical to the investment case.
Year end |
Revenue* |
EBITDA* |
PBT** |
EPS** |
DPS |
P/E |
12/19 |
47.5 |
21.6 |
2.0 |
(0.01) |
0.00 |
N/A |
12/20 |
46.0 |
28.9 |
9.2 |
0.05 |
0.00 |
33.8 |
12/21e |
105.0 |
62.1 |
37.9 |
0.17 |
0.00 |
9.9 |
12/22e |
55.6 |
33.5 |
13.8 |
0.06 |
0.00 |
28.2 |
12/23e |
256.1 |
131.9 |
111.4 |
0.49 |
0.00 |
3.4 |
Note: *Estimates are based on sales forecasts largely denominated in €/US$, and therefore vary with exchange rate movements to the PLN. **PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
FY21 revenue estimate raised, PAT flat
Based on strong sales of SGWC2, launched in June 2021, CI Games confirmed Q321 revenues ahead of expectations at c PLN30.2m and PAT of c PLN9.8m, a 32.5% net margin. We anticipate Q421 trading to be similar to Q321 and therefore we have raised our FY21 revenue estimate by 12% to PLN105.0m. However, with Q321 margins slightly lower than we had estimated, we have reflected a blended annual margin consistent with Q321 at 32.5%, leading to FY21 reported PAT of PLN34.1m,
Third title confirmed alongside SGW and LotF
The release date of the new title has not been confirmed by CI Games, but with an expected two- to three-year development timeline, we would assume a release date in 2024, to follow Lords of the Fallen 2 (LotF2) and the next iteration of Sniper Ghost Warrior (SGW), both of which we expect to be released in 2023. We also assume a development budget between that for Sniper: Ghost Warrior Contracts 2 (US$5–6m) and LotF2 (US$15m in our initiation). The BatFields team will work under the close supervision of CI Games, with senior input from the group’s creative, artistic and technical directors, as well as project management.
Valuation: Material discount to European peers
As a domestically held stock with a mixed history of execution, CI Games trades on 2.2x EV/EBITDA and 3.4x P/E in FY23e, compared to its peer group on 12.3x EV/EBITDA and 22.5x P/E in FY23e. If CI Games can successfully launch the next SGW game and LotF2 in FY23 to establish a broad-based portfolio, both our DCF analysis and peer multiples indicate the potential for almost 5x upside as a reward for early investors in this growth story.
FY21 estimates upgraded
Following a strong Q321 trading update and ahead of CI Games’ seasonally strongest quarter, we have raised our FY21 estimates, assuming that Q421 revenues will be similar to Q321, with annual revenues rising by 12% to PLN105.0m. However, as margins were slightly lower than we had estimated (Q321: 32.5%), we have reflected a 32.5% blended annual margin leading to FY21 reported PAT of PLN34.1m, materially unchanged from our previous estimate.
Exhibit 1: Revised estimates
2020 |
2021e |
2022e |
2023e |
|||||||
PLN'000s |
Old |
New |
Change |
Old |
New |
Change |
Old |
New |
Change |
|
Revenue |
46,010 |
93,734 |
105,003 |
12.0% |
55,651 |
55,589 |
-0.1% |
256,661 |
256,087 |
-0.2% |
COGS |
(26,683) |
(40,736) |
(50,134) |
23.1% |
(29,492) |
(29,459) |
-0.1% |
(111,543) |
(111,294) |
-0.2% |
Gross Profit |
19,327 |
52,998 |
54,869 |
3.5% |
26,159 |
26,130 |
-0.1% |
145,118 |
144,793 |
-0.2% |
EBITDA |
28,919 |
62,379 |
62,052 |
-0.5% |
33,480 |
33,450 |
-0.1% |
132,074 |
131,893 |
-0.1% |
Profit Before Tax (reported) |
8,532 |
38,203 |
37,879 |
-0.8% |
13,797 |
13,763 |
-0.2% |
111,534 |
111,358 |
-0.2% |
Profit After Tax (reported) |
7,097 |
34,383 |
34,091 |
-0.8% |
12,418 |
12,387 |
-0.2% |
89,227 |
89,086 |
-0.2% |
EPS - normalised (PLN) |
0.05 |
0.17 |
0.17 |
-0.8% |
0.06 |
0.06 |
-0.2% |
0.49 |
0.49 |
-0.2% |
Dividend (PLN) |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
|||
Revenue growth (%) |
(3.1) |
103.7 |
128.2 |
(40.6) |
(47.1) |
361.2 |
360.7 |
|||
Gross Margin (%) |
42.0 |
56.5 |
52.3 |
47.0 |
47.0 |
56.5 |
56.5 |
|||
EBITDA Margin (%) |
62.9 |
66.5 |
59.1 |
60.2 |
60.2 |
51.5 |
51.5 |
|||
Net margin (%) |
15.4 |
36.7 |
32.5 |
22.3 |
22.3 |
34.8 |
34.8 |
|||
Closing net debt/(cash) |
(21,983) |
(33,691) |
(35,166) |
4.4% |
(57,126) |
(55,568) |
-2.7% |
(70,480) |
(68,383) |
-3.0% |
Source: CI Games accounts, Edison Investment Research
Although we have not made any material changes to our FY22 estimates (it is too early to be clear about how or whether sales of SGWC2 will change in FY22) or FY23 (which will be determined by the success of the next iteration of the SGW franchise and LotF2), we would note that our estimates are based on sales forecasts largely denominated in €/US$. These therefore vary with exchange rate movements when translated to PLN.
Exhibit 2: Financial summary
PLN'000 |
2018 |
2019 |
2020 |
2021e |
2022e |
2023e |
||
31-December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
||||||||
Revenue |
|
|
21,985 |
47,478 |
46,010 |
105,003 |
55,589 |
256,087 |
COGS |
(17,131) |
(29,013) |
(26,683) |
(50,134) |
(29,459) |
(111,294) |
||
Gross Profit |
4,854 |
18,465 |
19,327 |
54,869 |
26,130 |
144,793 |
||
EBITDA |
|
|
6,916 |
21,598 |
28,919 |
62,052 |
33,450 |
131,893 |
Normalised operating profit |
|
|
(4,658) |
2,837 |
9,380 |
37,845 |
13,678 |
111,391 |
Amortisation of acquired intangibles |
0 |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
(17,720) |
(1,790) |
(651) |
0 |
0 |
0 |
||
Share-based payments |
0 |
0 |
0 |
0 |
0 |
0 |
||
Reported operating profit |
(22,378) |
1,047 |
8,729 |
37,845 |
13,678 |
111,391 |
||
Net Interest |
431 |
(828) |
(197) |
34 |
85 |
(33) |
||
Joint ventures & associates (post tax) |
0 |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(4,227) |
2,009 |
9,183 |
37,879 |
13,763 |
111,358 |
Profit Before Tax (reported) |
|
|
(21,947) |
219 |
8,532 |
37,879 |
13,763 |
111,358 |
Reported tax |
(746) |
(3,096) |
(1,435) |
(3,788) |
(1,376) |
(22,272) |
||
Profit After Tax (norm) |
(2,959) |
(1,553) |
7,607 |
30,303 |
11,011 |
89,086 |
||
Profit After Tax (reported) |
(22,693) |
(2,877) |
7,097 |
34,091 |
12,387 |
89,086 |
||
Minority interests |
0 |
0 |
0 |
0 |
0 |
0 |
||
Discontinued operations |
0 |
0 |
0 |
0 |
0 |
0 |
||
Net income (normalised) |
(2,959) |
(1,553) |
7,607 |
30,303 |
11,011 |
89,086 |
||
Net income (reported) |
(22,693) |
(2,877) |
7,097 |
34,091 |
12,387 |
89,086 |
||
Average number of shares outstanding (m) |
151.1 |
155.4 |
167.8 |
182.9 |
182.9 |
182.9 |
||
EPS - normalised (PLN) |
|
|
(0.02) |
(0.01) |
0.05 |
0.17 |
0.06 |
0.49 |
EPS - diluted normalised (PLN) |
|
|
(0.02) |
(0.01) |
0.05 |
0.17 |
0.06 |
0.49 |
EPS - basic reported (PLN) |
|
|
(0.15) |
(0.02) |
0.04 |
0.19 |
0.07 |
0.49 |
Dividend (PLN) |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
||
Revenue growth (%) |
(78.7) |
116.0 |
(3.1) |
128.2 |
(47.1) |
360.7 |
||
Gross Margin (%) |
22.1 |
38.9 |
42.0 |
52.3 |
47.0 |
56.5 |
||
EBITDA Margin (%) |
31.5 |
45.5 |
62.9 |
59.1 |
60.2 |
51.5 |
||
Normalised Operating Margin |
(21.2) |
6.0 |
20.4 |
36.0 |
24.6 |
43.5 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
60,261 |
62,297 |
69,137 |
63,440 |
65,414 |
66,657 |
Intangible Assets |
52,282 |
54,828 |
58,987 |
53,866 |
56,342 |
58,021 |
||
Tangible Assets |
1,083 |
376 |
437 |
396 |
375 |
372 |
||
Right-of-use assets |
0 |
1,133 |
6,484 |
5,949 |
5,468 |
5,035 |
||
Investments & other |
6,896 |
5,960 |
3,229 |
3,229 |
3,229 |
3,229 |
||
Current Assets |
|
|
19,433 |
34,803 |
41,150 |
73,708 |
79,281 |
160,514 |
Stocks |
2,687 |
3,118 |
1,576 |
3,098 |
1,740 |
6,878 |
||
Debtors |
3,110 |
19,921 |
6,833 |
17,261 |
10,414 |
46,587 |
||
Cash & cash equivalents |
12,612 |
6,659 |
28,207 |
49,314 |
63,092 |
103,014 |
||
Other |
1,024 |
5,105 |
4,534 |
4,035 |
4,035 |
4,035 |
||
Current Liabilities |
|
|
(8,615) |
(30,308) |
(5,570) |
(9,662) |
(6,045) |
(20,216) |
Creditors |
(3,375) |
(4,675) |
(3,169) |
(5,288) |
(3,323) |
(10,788) |
||
Tax and social security |
(450) |
0 |
0 |
0 |
0 |
0 |
||
Short term borrowings |
(3,468) |
(24,051) |
(33) |
(75) |
(40) |
(184) |
||
Lease liabilities |
(224) |
(634) |
(324) |
(739) |
(391) |
(1,803) |
||
Other |
(1,098) |
(948) |
(2,044) |
(3,560) |
(2,290) |
(7,441) |
||
Long Term Liabilities |
|
|
(17,209) |
(6,474) |
(8,173) |
(18,652) |
(9,875) |
(45,490) |
Long term borrowings |
(12,744) |
0 |
0 |
0 |
0 |
0 |
||
Lease liabilities |
(303) |
(269) |
(5,867) |
(13,390) |
(7,088) |
(32,655) |
||
Other long term liabilities |
(4,162) |
(6,205) |
(2,306) |
(5,263) |
(2,786) |
(12,835) |
||
Net Assets |
|
|
53,870 |
60,318 |
96,544 |
108,833 |
128,775 |
161,465 |
Minority interests |
0 |
0 |
(169) |
(169) |
(169) |
(169) |
||
Shareholders equity |
|
|
53,870 |
60,318 |
96,375 |
108,664 |
128,606 |
161,296 |
CASH FLOW |
||||||||
Op Cash Flow before WC and tax |
7,347 |
20,770 |
28,722 |
62,085 |
33,535 |
131,861 |
||
Working capital |
5,040 |
(20,665) |
13,485 |
(9,831) |
6,240 |
(33,846) |
||
Exceptional & other |
(3,592) |
(1,463) |
(51) |
(15) |
(106) |
(91) |
||
Tax |
0 |
(136) |
(1,547) |
(3,788) |
(1,376) |
(22,272) |
||
Operating cash flow |
|
|
8,795 |
(1,494) |
40,609 |
48,451 |
38,293 |
75,652 |
Capex |
(1,107) |
(2,059) |
(2,597) |
(5,927) |
(3,138) |
(14,455) |
||
Capitalised development costs |
(24,386) |
(18,255) |
(19,864) |
(20,577) |
(20,577) |
(20,577) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
0 |
||
Net interest |
(151) |
(574) |
(391) |
(391) |
(391) |
(391) |
||
Equity financing |
20 |
9,279 |
29,124 |
0 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
126 |
538 |
190 |
(434) |
(435) |
(435) |
||
Net Cash Flow |
(16,703) |
(12,565) |
47,071 |
21,123 |
13,752 |
39,794 |
||
Opening net debt/(cash) |
|
|
(13,335) |
4,127 |
18,295 |
(21,983) |
(35,166) |
(55,568) |
FX |
0 |
0 |
(16) |
0 |
0 |
0 |
||
Other non-cash movements |
(759) |
(1,603) |
(6,777) |
(7,940) |
6,649 |
(26,979) |
||
Closing net debt/(cash) |
|
|
4,127 |
18,295 |
(21,983) |
(35,166) |
(55,568) |
(68,383) |
Source: Company accounts, Edison Investment Research
|
|
Research: Financials
ProCredit (PCB) maintains its market position as an impact-oriented bank for small and medium-sized enterprises (SMEs) in Southeastern (SEE) and Eastern Europe (EE) as well as Ecuador. It has navigated the COVID-19 crisis well and posted strong 7.7% loan book growth in H121, a 10bp cost of risk (below its closest peers) and a solid capital base (CET1 ratio of 13.7% at end-H121 versus a regulatory requirement of 8.2%). Management has confirmed its FY21 guidance and medium-term targets, but plans to update the latter in March 2022 as the targeted 10% ROE and 20% share of green loans in loan book are already within reach in FY21.
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