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Yesterday (15 December), Next Games announced the signing of a five-year co-development agreement for a mobile game in a deal worth up to USD 16.5m. We raise our 2021E-23E revenue and earnings accordingly but note the uncertainty inherent in our estimates due to limited disclosure of the deal structure. In our view, Next Games' equity story remains subject to downside risks owing to its high reliance on individual games (Stranger Things: Puzzle Tales comprises ~50% of 2022E revenue), limited financial resources and the uncertainty related to the upcoming launch schedule. On the other hand, the commercial success of Stranger Things: Puzzle Tales could prove to be a positive swing factor for 2022. In addition, potential strategic partnerships or even a takeover could lead to upside for investors, although visibility of these factors remains weak. Our fair value range decreases to EUR 1.3-1.8 (1.3-1.9) due to lower peer multiples. Marketing material commissioned by Next Games.

Source: Finwire News.

Next Games is a developer and publisher of licensed mobile games. We are a trendsetter in service-based mobile games based on mass entertainment products such as movies, TV series or books. We develop games in close cooperation with the license owners of the entertainment products to ensure a tight connection between the game and the original entertainment product – for instance a TV-series. So far, we have published two games that have received praise from the critics, both in 2015. Our game The Walking Dead: No Man’s Land has been downloaded approximately 16 million times.