G5 Entertainment: Positive momentum continues - ABG

Q1 due 4 May; trends continue to look positive...
...with HC stabilising and Sherlock growing
Share trading at 8x EV/EBIT 2023e, with 8% FCF yield


Market outperformance and positive trend into Q1'23

We forecast a stable Q1 for G5, with sales of SEK 350m (+5% y-o-y, of which -5% organic, 10% FX) compared to overall market growth of a negative ~8% in Q1, according to market data platforms. The trend for G5 remains positive, with org. growth improving q-o-q once again (-10% in Q3'22 and -7% in Q4'22). Hidden City seems to be maintaining a very stable revenue trend as well, which is encouraging. We expect HC's growth to be positive y-o-y for the first quarter in over four years (measured in SEK). We also forecast Sherlock to set a new all-time high in quarterly sales in Q1 (up 2% q-o-q and 50% y-o-y). On costs, the RUB has depreciated slightly, which reduces personnel costs, while we expect UAC/sales to be higher compared to Q4'22. With slightly lower sales q-o-q due to seasonality, we forecast a lower EBIT margin of 11% in Q1'23e for EBIT of SEK 39m.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/g5-entertainment/Equity-research/2023/4/g5-entertainment---positive-momentum-continues/