Currency in GBP
Last close As at 26/01/2023
GBP91.45
▲ −185.00 (−1.98%)
Market capitalisation
GBP3,070m
Research: Consumer
Games Workshop Group’s (GAW’s) Q322 trading update (to the end of February), which indicates that trading is in line with expectations, is reassuring given the incremental cost pressures (including freight) highlighted in the H122 results. We believe the company’s cash position is better than we expected given the declaration of a further dividend (70p/share), taking the cumulative (financial) year to date total to 235p/share. We make no changes to our forecasts beyond increasing our FY22 dividend estimate to 235p/share, a flat dividend versus FY21. The share price weakness means that the P/E multiples for FY22e (19.3x) and FY23e (18.7x) are below more recent non-COVID affected peak multiples.
Games Workshop Group |
Upgrading forecast for FY22 cash returns |
Q322 trading and dividend |
Consumer goods |
24 March 2022 |
Share price performance
Business description
Next events
Analysts
Games Workshop Group is a research client of Edison Investment Research Limited |
Games Workshop Group’s (GAW’s) Q322 trading update (to the end of February), which indicates that trading is in line with expectations, is reassuring given the incremental cost pressures (including freight) highlighted in the H122 results. We believe the company’s cash position is better than we expected given the declaration of a further dividend (70p/share), taking the cumulative (financial) year to date total to 235p/share. We make no changes to our forecasts beyond increasing our FY22 dividend estimate to 235p/share, a flat dividend versus FY21. The share price weakness means that the P/E multiples for FY22e (19.3x) and FY23e (18.7x) are below more recent non-COVID affected peak multiples.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
05/20 |
269.7 |
89.4 |
217.8 |
145.0 |
32.7 |
2.0 |
05/21 |
353.2 |
150.9 |
370.5 |
235.0 |
19.2 |
3.3 |
05/22e |
377.8 |
158.2 |
386.5 |
235.0 |
18.4 |
3.3 |
05/23e |
403.7 |
163.5 |
398.3 |
275.0 |
17.9 |
3.9 |
Note: *PBT and EPS (fully diluted) are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
FY22 dividend forecast upgraded
GAW’s dividend policy is to distribute ‘truly surplus’ cash, and it typically declares a number of dividends through the financial year as visibility on what is truly surplus improves. The dividend of 70p/share declared today takes the cumulative (financial) year to date dividend to 235p/share, equivalent to the total declared for the whole of FY21 and more than 185p/share at this stage last year. After the H122 results, we reduced our dividend forecasts for FY22 (from 250p/share to 220p/share) to reflect potential delays in tax refunds (new import VAT that is paid post Brexit as goods enter the EU) from a couple of countries. We increase out FY22 dividend forecast to 235p/share, but make no changes to our revenue and profit estimates for FY22 and FY23.
Valuation: DCF-based valuation remains £134/share
The share price weakness has reduced the P/E multiples for FY22e and FY23e to 19.3x and 18.7x, respectively, versus the non-COVID affected peak multiple (FY19) of 22.7x. Our DCF-based valuation of £134/share is unchanged given there is no change to our profit estimates.
Exhibit 1: Financial summary
Year-end May |
£m |
|
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
2022e |
2023e |
|
|
|
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
INCOME STATEMENT |
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
119.1 |
118.1 |
158.1 |
221.3 |
256.6 |
269.7 |
353.2 |
377.8 |
403.7 |
Cost of sales |
|
|
(37.0) |
(37.4) |
(43.7) |
(64.2) |
(83.3) |
(89.1) |
(96.3) |
(117.1) |
(125.1) |
Gross profit |
|
|
82.1 |
80.6 |
114.4 |
157.1 |
173.3 |
180.6 |
256.9 |
260.7 |
278.5 |
SG&A (expenses) |
|
|
(67.2) |
(69.7) |
(83.6) |
(92.4) |
(103.4) |
(107.4) |
(121.5) |
(128.8) |
(131.4) |
Other operating income/(expense) |
|
|
1.5 |
5.9 |
7.5 |
9.6 |
11.4 |
16.8 |
16.3 |
27.0 |
17.0 |
Exceptionals and adjustments |
|
|
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
EBITDA (excluding royalties) |
|
|
26.0 |
21.3 |
41.8 |
76.8 |
85.7 |
98.8 |
162.0 |
159.0 |
175.6 |
EBITDA |
|
|
27.5 |
27.3 |
49.3 |
86.5 |
97.1 |
115.6 |
178.3 |
186.0 |
192.6 |
Depreciation and amortisation |
|
|
(11.1) |
(10.4) |
(11.0) |
(12.1) |
(15.9) |
(25.6) |
(26.6) |
(27.1) |
(28.4) |
Operating profit (before royalties and exceptionals) |
|
14.9 |
10.9 |
30.8 |
64.7 |
69.8 |
73.2 |
135.4 |
131.9 |
147.1 |
|
Reported operating profit |
|
|
16.5 |
16.9 |
38.3 |
74.3 |
81.2 |
90.0 |
151.7 |
158.9 |
164.1 |
Finance income/(expense) |
|
|
0.1 |
0.1 |
0.1 |
(0.0) |
0.1 |
(0.6) |
(0.8) |
(0.7) |
(0.7) |
Reported PBT |
|
|
16.6 |
16.9 |
38.4 |
74.3 |
81.3 |
89.4 |
150.9 |
158.2 |
163.5 |
Income tax expense (includes exceptionals) |
|
|
(4.3) |
(3.5) |
(7.9) |
(14.8) |
(15.5) |
(18.1) |
(28.9) |
(30.5) |
(31.5) |
Adjusted net income |
|
|
12.2 |
13.5 |
30.5 |
59.5 |
65.8 |
71.3 |
122.0 |
127.6 |
131.9 |
Reported net income |
|
|
12.3 |
13.5 |
30.5 |
59.5 |
65.8 |
71.3 |
122.0 |
127.6 |
131.9 |
WASC (m) |
|
|
31.975 |
32.093 |
32.126 |
32.258 |
32.438 |
32.602 |
32.733 |
32.827 |
32.928 |
Diluted average number of shares (m) |
|
|
32.025 |
32.150 |
32.325 |
32.732 |
32.785 |
32.736 |
32.927 |
33.021 |
33.122 |
Reported EPS (p) |
|
|
38.3 |
42.1 |
95.1 |
184.3 |
202.9 |
218.7 |
372.7 |
388.8 |
400.6 |
Reported diluted EPS (p) |
|
|
38.3 |
42.0 |
94.5 |
181.6 |
200.8 |
217.8 |
370.5 |
386.5 |
398.3 |
Adjusted diluted EPS (p) |
|
|
38.1 |
42.0 |
94.5 |
181.6 |
200.8 |
217.8 |
370.5 |
386.5 |
398.3 |
DPS (p) |
|
|
52.0 |
40.0 |
74.0 |
126.0 |
155.0 |
145.0 |
235.0 |
235.0 |
275.0 |
Gross margin |
|
|
69.0% |
68.3% |
72.4% |
71.0% |
67.5% |
67.0% |
72.7% |
69.0% |
69.0% |
EBITDA margin (excl royalties) |
|
|
21.8% |
18.1% |
26.5% |
34.7% |
33.4% |
36.6% |
45.9% |
42.1% |
43.5% |
EBITDA margin (incl royalties) |
|
|
23.1% |
23.1% |
31.2% |
39.1% |
37.8% |
42.9% |
50.5% |
49.2% |
47.7% |
Operating margin (before royalties and exceptionals) |
|
|
12.5% |
9.2% |
19.5% |
29.2% |
27.2% |
27.1% |
38.3% |
34.9% |
36.5% |
BALANCE SHEET |
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
22.7 |
22.6 |
22.1 |
30.1 |
35.3 |
42.0 |
49.8 |
58.7 |
67.6 |
Right-of-use assets |
|
|
|
|
|
|
|
31.9 |
46.0 |
45.0 |
44.0 |
Goodwill |
|
|
1.4 |
1.4 |
1.4 |
1.4 |
1.4 |
1.4 |
1.4 |
1.4 |
1.4 |
Intangible assets |
|
|
8.3 |
10.5 |
12.9 |
14.2 |
16.0 |
17.6 |
23.7 |
29.8 |
35.5 |
Other non-current assets |
|
|
4.8 |
4.1 |
6.5 |
7.8 |
11.7 |
16.4 |
16.4 |
16.4 |
16.4 |
Total non-current assets |
|
|
37.2 |
38.7 |
43.0 |
53.5 |
64.4 |
109.3 |
137.3 |
151.3 |
164.9 |
Cash and equivalents |
|
|
12.6 |
11.8 |
17.9 |
28.5 |
29.4 |
52.9 |
85.2 |
118.8 |
143.6 |
Inventories |
|
|
7.6 |
8.5 |
12.4 |
20.2 |
24.2 |
20.7 |
27.5 |
33.4 |
35.7 |
Trade and other receivables |
|
|
9.4 |
10.1 |
13.0 |
15.5 |
18.8 |
19.6 |
30.6 |
32.7 |
35.0 |
Other current assets |
|
|
0.6 |
0.7 |
0.6 |
0.5 |
0.8 |
0.2 |
1.1 |
1.1 |
1.1 |
Total current assets |
|
|
30.2 |
31.2 |
43.9 |
64.7 |
73.2 |
93.4 |
144.4 |
186.1 |
215.4 |
Trade and other payables |
|
|
(13.1) |
(12.8) |
(16.5) |
(20.3) |
(19.2) |
(30.3) |
(35.4) |
(40.8) |
(42.5) |
Borrowings |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Leases |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
(8.3) |
(8.6) |
(8.6) |
(8.6) |
Other current liabilities |
|
|
(2.0) |
(2.7) |
(6.5) |
(7.3) |
(10.1) |
(4.5) |
(0.7) |
(0.7) |
(0.7) |
Total current liabilities |
|
|
(15.1) |
(15.6) |
(23.0) |
(27.6) |
(29.3) |
(43.1) |
(44.7) |
(50.1) |
(51.8) |
Borrowings |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Leases |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
(23.8) |
(38.4) |
(37.0) |
(35.6) |
Other non-current liabilities |
|
|
(0.8) |
(1.1) |
(1.0) |
(1.2) |
(1.9) |
(2.1) |
(2.3) |
(2.3) |
(2.3) |
Total non-current liabilities |
|
|
(0.8) |
(1.1) |
(1.0) |
(1.2) |
(1.9) |
(25.9) |
(40.7) |
(39.3) |
(37.9) |
Net assets |
|
|
51.5 |
53.2 |
62.8 |
89.3 |
106.5 |
133.7 |
196.3 |
248.0 |
290.6 |
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
|
|
|
|
EBIT |
|
|
16.5 |
16.9 |
38.3 |
74.3 |
81.2 |
90.0 |
151.7 |
158.9 |
164.1 |
Depreciation and amortisation |
|
|
11.1 |
10.4 |
10.2 |
12.2 |
15.9 |
25.0 |
26.2 |
27.1 |
28.4 |
Impairments |
|
|
0.0 |
0.0 |
0.8 |
(0.0) |
0.0 |
0.6 |
0.4 |
0.0 |
0.0 |
Share-based payments |
|
|
0.2 |
0.2 |
0.2 |
0.2 |
0.3 |
0.5 |
1.2 |
1.2 |
1.2 |
Other adjustments |
|
|
0.1 |
0.1 |
0.1 |
0.1 |
0.3 |
0.3 |
0.1 |
0.0 |
0.0 |
Movements in working capital |
|
|
(2.3) |
(0.8) |
(0.2) |
(4.4) |
(9.0) |
10.8 |
(14.8) |
(2.7) |
(2.8) |
Income taxes paid |
|
|
(2.3) |
(2.6) |
(5.5) |
(12.2) |
(16.3) |
(22.7) |
(32.1) |
(30.5) |
(31.5) |
Operating cash flow |
|
|
23.3 |
24.2 |
43.9 |
70.1 |
72.5 |
104.5 |
132.7 |
154.0 |
159.4 |
Net capex and intangibles |
|
|
(12.3) |
(12.7) |
(12.8) |
(21.6) |
(22.5) |
(24.6) |
(30.0) |
(31.1) |
(32.0) |
Net interest |
|
|
0.1 |
0.1 |
0.1 |
(0.0) |
0.1 |
0.1 |
0.2 |
(0.7) |
(0.7) |
Net proceeds from issue of shares |
|
|
0.7 |
0.3 |
0.1 |
0.9 |
0.7 |
0.8 |
1.4 |
0.0 |
0.0 |
Dividends paid |
|
|
(16.6) |
(12.8) |
(23.8) |
(38.7) |
(50.3) |
(47.3) |
(60.5) |
(77.1) |
(90.6) |
Other financing activities |
|
|
0.0 |
0.0 |
(1.9) |
0.0 |
0.0 |
(10.3) |
(10.9) |
(11.4) |
(11.4) |
Net cash flow |
|
|
(4.8) |
(0.9) |
5.5 |
10.7 |
0.5 |
23.2 |
32.9 |
33.6 |
24.8 |
Opening cash and cash equivalents |
|
|
17.6 |
12.6 |
11.8 |
17.9 |
28.5 |
29.4 |
52.9 |
85.2 |
118.8 |
Currency translation differences and other |
|
|
(0.2) |
0.1 |
0.6 |
(0.1) |
0.3 |
0.3 |
(0.6) |
0.0 |
0.0 |
Closing cash and cash equivalents |
|
|
12.6 |
11.8 |
17.9 |
28.5 |
29.4 |
52.9 |
85.2 |
118.8 |
143.6 |
Closing net cash (including leases) |
|
|
12.6 |
11.8 |
17.9 |
28.5 |
29.4 |
20.8 |
38.2 |
73.2 |
99.4 |
Source: Company accounts, Edison Investment Research
|
|
Research: TMT
Doctor Care Anywhere Group (DOC) is a fast-growing telehealth company focused on the private healthcare sector. Following its successful IPO in December 2020, the group delivered a strong performance in its first year of trading and achieved several of the goals set out in its prospectus. At the end of 2021, management outlined its plan for profitable growth, underpinned by its new operating model and updated master services agreement with AXA Health. We have reflected this in our updated forecasts, where we expect DOC to generate positive EBITDA for H223.
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