G5 Entertainment: Needs new games for growth to stabilise - ABG
This is a third party research report and does not necessarily reflect our views or values
Growth remains soft while we wait for new releases
EBIT ests. down, but we maintain the FCF ests.
13% FCF yield on '24e, SEK 215m net cash end of '23
Weaker sales behind Q4 miss, but FCF solid
Sales surprised slightly negatively in Q4 (-4% vs. ABGSCe, -3% vs. FactSet consensus), primarily due to weaker sales for older games that are put in harvest mode, while Hidden City grew slightly q-o-q and Sherlock was more stable. Because of its relatively fixed opex base, the lower sales drove a significant miss on adj. EBIT (-21% vs. ABGSCe, -21% vs. consensus). EBIT adjusted for a SEK 14m FX loss was SEK 25m compared to a FCF of SEK 26m before working capital changes. We have revised down '24e-'25e sales by 2-3% and adj. EBIT by 12-8% after the report.
EBIT ests. down, but we maintain the FCF ests.
13% FCF yield on '24e, SEK 215m net cash end of '23
Weaker sales behind Q4 miss, but FCF solid
Sales surprised slightly negatively in Q4 (-4% vs. ABGSCe, -3% vs. FactSet consensus), primarily due to weaker sales for older games that are put in harvest mode, while Hidden City grew slightly q-o-q and Sherlock was more stable. Because of its relatively fixed opex base, the lower sales drove a significant miss on adj. EBIT (-21% vs. ABGSCe, -21% vs. consensus). EBIT adjusted for a SEK 14m FX loss was SEK 25m compared to a FCF of SEK 26m before working capital changes. We have revised down '24e-'25e sales by 2-3% and adj. EBIT by 12-8% after the report.