Goodbye Kansas Group: Briefly pausing in order to fast forward - ABG

Growth despite postponed projects

We reduce sales estimates by 9% for FY’22e

The share trades at EV/Sales 0.7x-0.6x for ’22e-‘23e

Q2 sales grew 8% y-o-y, -10% below our expectations
On balance, the first half of 2022 was characterised by significant growth amidst a reorganisation process. Sales grew 8% y-o-y (10% below our expectations) and EBITDA was SEK -9.6m vs. ABGSCe SEK 0.1m. We note that SEK 2.7m is related to the restructuring process and is deemed non-recurring. Importantly, the company announced four large orders during Q2 for a total contract value of SEK 51m, serving as evidence of the company’s ability to win larger projects. FCF ex. acquisitions was SEK -27m vs. SEK -17m last year.

Project postponements create deep backlog
Currently, the company is undergoing a restructuring process that entails divesting Sayduck and reviewing strategic options for Vobling. We expect the reorganisation, which is anticipated to lead to larger-sized projects, to contribute with: (1) improved internal planning and thus higher visibility on revenues in the longer term, (2) greater potential for the company to gain exposure to blockbuster titles and thereby gain more recognition for its work, and (3) a greater probability of profitable growth. Due to industry and market circumstances, however, several of Goodbye Kansas Group’s projects have been postponed, thereby pushing the completion of these projects to next year. As a result of the current sentiment in the entertainment industry as well as the ongoing restructuring, we reduce our sales estimate by -9% for FY 2022e, resulting in a slightly positive EBITDA of SEK 1.2m for the same period. That said, we essentially maintain our long-term outlook based on the continued strong order intake and the increased focus on larger projects.

Slightly reduce our fair value range to SEK 0.4-2.3 per share
Based on our estimate revisions, we slightly reduce our fair value range to SEK 0.4-2.3 per share, from SEK 0.5-2.4 per share. The share is ...
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