Goodbye Kansas Group - Solid start to the year for GBK Group
Q1’21 EBITDA SEK -10m vs. ABGSCe SEK -14m GBK studios deal (SEK 37m) and D&A drive estimates SOTP fair value range SEK 2. 0-6. 8 (2.
1-7. 0) per share Pre-announced Q1’21 figures slightly better than ABGSCe Goodbye Kansas Group reported a solid Q1’21 report, where the sales and EBITDA figures were pre-announced in conjunction with management’s new financial targets of growing sales by an average of 20% per year and reaching an EBITDA margin of at least 20% by 2024. Reported net sales were SEK 59m, -9% vs.
ABGSCe, where Goodbye Kansas Studios generated ~90% of total sales through its SEK 53m contribution. This was slightly below our expectations, as the film/TV business remained inhibited by COVID-19, but profitability within the segment was slightly better than expected with EBITDA of SEK -5m vs. ABGSCe at SEK -6m.
Group EBITDA in Q1’21 was SEK -10m vs. ABGSCe SEK -14m, mainly driven by lower personnel expenses than we had anticipated. GBK studios deal raises sales, but game delay pressures Our estimate changes are driven primarily by increasing our sales estimates for Goodbye Kansas Studios by 7.
8-9. 3% for ‘21e-‘23e, where the short-term driver is the newly signed SEK 37m performance capture deal to be delivered in Q2/Q3’21e. We also lower our sales assumptions for Games & Apps in 2021e, as the launch of Hello Kitty AR: Kawaii World has been postponed and will not happen in 2021.
Following our estimate changes, we arrive at a ‘21e-‘23e sales CAGR of 23% and an EBITDA margin of 11. 5% by ‘23e, which can be viewed in relation to the new financial targets above. SOTP on ‘21e sales yields fair value of SEK 2.
0-6. 8 per share We adjust our SOTP fair value range to SEK 2. 0-6.
8 per share (2. 1-7. 0).
At the current share price, GBK is trading at an EV/sales of 1. 1-0. 8x for ’21e-’23e, which is well below both our Nordic software and mobile game developer peer group medians.