Gaming Realms - Update

Licensing led strategy delivering strong growth – shares remain significantly undervalued

Gaming Realms is a creator and licensor of innovative games for mobile, with operations in the UK, U.S. and Canada. Through its unique IP and brands, Gaming Realms brings together media, entertainment and gaming assets in new game formats.

  • Focus on high margin licensing operations

    Following the disposal of its remaining real money gaming (RMG) operations in July 2019 Gaming Realms is now focusing on becoming a leading licensor of games to the global gaming industry. The licensing division focusses on IP brand and content licensing to partners, with the “Slingo Originals” games library being its flagship content. High margins are earned due to there being relatively few direct sales costs associated with such deals in the long-term.

  • Interims show triple digit growth in licensing revenues

    Results for the six months to June 2019 revealed the first set of figures since the RMG business disposal. Numbers for the period showed total group revenues from the continuing operations (excluding real money gaming and affiliates) rising by 18% to £3.2 million. Justifying the decision to focus on Licensing, revenues from this segment soared by 167% to £1.6 million. With new content going live with a number of new partners late in 2019 and into this year, 2020 is expected to see further significant growth

  • Peer derived valuation suggests upside of 269%

    Applying a discounted peer derived multiple to our 2022 forecasts implies an equity valuation of £90.51 million. Discounted back to the end of 2020 at a rate of 12% derives a value of £72.15 million, or a price per share of 25.37p. This implies upside of 269% from the current price of 6.875p. We update coverage of Gaming Realms with a stance of Conviction Buy.

  • RISK WARNING & DISCLAIMER

    Gaming Realms is a research client of Align Research. Align Research and a director of Align Research own shares in Gaming Realms. Full details of our Company & Personal Account Dealing Policy can be found on our website http://www.alignresearch.co.uk/legal/ 

    For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.

Table: financial overview
Year to Dec 2020E 2021E 2022E
Revenues (£m) 9.69 12.39 14.42
Adjusted EBITDA (£m) 1.49 3.31 5.02
Pre-tax (£m) (2.09) (0.47) 1.39
Source: Align Research

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