Ori­gi­nal-Re­se­arch: Me­dia and Games In­vest SE – by GBC AG

Clas­si­fi­ca­ti­on of GBC AG to Me­dia and Games In­vest SE

Com­pa­ny Name: Me­dia and Games In­vest SE
ISIN: SE0018538068

Re­ason for the re­se­arch: Re­se­arch stu­dy (Anno)
Re­com­men­da­ti­on: BUY
Tar­get pri­ce: 4.50 EUR
Last ra­ting ch­an­ge:
Ana­lyst: Mar­cel Gold­mann, Cos­min Fil­ker

Fi­nan­cial year 2023 with so­lid ope­ra­ting per­for­mance fi­na­li­sed; Re­turn to or­ga­nic growth is ex­pec­ted for the 2024 fi­nan­cial year; Ex­pan­si­on of the di­gi­tal ad­ver­ti­sing plat­form busi­ness should enable si­gni­fi­cant­ly pro­fi­ta­ble growth in fu­ture; Tar­get pri­ce: € 4.50 (pre­vious­ly: € 4.50); Ra­ting: BUY

Ac­cor­ding to its pu­blished busi­ness fi­gu­res, the MGI Group achie­ved a so­lid sa­les per­for­mance in the past fi­nan­cial year 2023 de­spi­te a dif­fi­cult en­vi­ron­ment and mar­ket si­tua­ti­on, ge­ne­ra­ting sa­les of € 321.98 mil­li­on (PY: € 324.44 mil­li­on). On a com­pa­ra­ble ba­sis, or­ga­nic sa­les even in­creased by 5.0% com­pared to the pre­vious year. A par­ti­cu­lar­ly high or­ga­nic sa­les growth rate of 16.0% was achie­ved in the fi­nal quar­ter, which is tra­di­tio­nal­ly the stron­gest quar­ter in terms of sa­les. The main con­tri­bu­tors to this growth were the 18.9% in­crease in the soft­ware cus­to­mer base to 2,276 cus­to­mers at the end of the fi­nan­cial year (end of 2022: 1,915) and the 19.1% in­crease in the vo­lu­me of di­gi­tal ad­ver­ti­sing de­li­ver­ed to 206 bil­li­on (ad­ver­ti­sing ads at the end of FY 2022: 173.0 bil­li­on). The re­ne­wed im­pro­ve­ment in MGI’s mar­ket po­si­ti­on in the mo­bi­le sec­tor is also re­flec­ted in the mar­ket-lea­ding po­si­ti­ons on iOS and An­droid with a US mar­ket share of 12.0% on both plat­forms ac­cor­ding to the in­dus­try ex­perts at Pix­a­la­te. This me­ans that the pre­vious­ly ad­jus­ted com­pa­ny gui­dance (sa­les of € 303.0 mil­li­on) and our sa­les esti­ma­te (GBCe: € 303.21 mil­li­on) were ex­cee­ded.

MGI achie­ved growth at all ear­nings le­vels, pri­ma­ri­ly due to the reva­lua­ti­on of the Axe­sIn­Mo­ti­on earn-out pay­ment lia­bi­li­ty (po­si­ti­ve one-off ef­fect of € 62.76 mil­li­on). Ac­cor­din­gly, EBITDA in­creased dy­na­mi­cal­ly by 51.6% to € 128.46 mil­li­on (PY: € 84.75 mil­li­on) com­pared to the pre­vious year. Ad­jus­ted for spe­cial ef­fects (e.g. M&A and res­truc­tu­ring cos­ts or reva­lua­tions of ba­lan­ce sheet items), ad­jus­ted EBITDA (Adj. EBITDA) to­tal­led € 95.20 mil­li­on, which was slight­ly abo­ve the pre­vious year’s le­vel (PY: € 93.20 mil­li­on). The ad­jus­ted EBITDA mar­gin (Adj. EBITDA mar­gin) also in­creased to 29.6% (PY: 28.7%). This in­crease in pro­fi­ta­bi­li­ty re­flec­ted the first po­si­ti­ve ef­fects of the cost-cut­ting pro­gram­me in­itia­ted last year, which should enable an­nu­al cost sa­vings of around € 10.0 mil­li­on once suc­cessful­ly im­ple­men­ted. Ac­cor­din­gly, the ad­jus­ted ear­nings gui­dance (ad­jus­ted EBITDA: € 93.0 mil­li­on) and our ear­nings esti­ma­te (ad­jus­ted EBITDA: € 93.07 mil­li­on) were ex­cee­ded.

In view of a strong fourth quar­ter (or­ga­nic growth Q4 2023: 16.0%) and an even stron­ger per­for­mance in the first quar­ter (or­ga­nic growth Q1 2024: 21.0%), MGI’s ma­nage­ment is po­si­ti­ve about the cur­rent fi­nan­cial year 2024 and ex­pects dou­ble-di­git growth and an im­pro­ve­ment in the ear­nings si­tua­ti­on. Ba­sed on the re­cent con­cre­ti­sa­ti­on of the gui­dance with the pu­bli­ca­ti­on of the Q1 busi­ness fi­gu­res, MGI now ex­pects sa­les re­ve­nues in a ran­ge of € 350.0 mil­li­on to € 370.0 mil­li­on and an ad­jus­ted EBITDA (Adj. EBITDA) of bet­ween € 100.0 mil­li­on and € 110.0 mil­li­on.

As part of the pu­bli­ca­ti­on of our re­se­arch stu­dy on the preli­mi­na­ry an­nu­al re­sults for 2023, we ad­jus­ted our pre­vious sa­les and ear­nings fo­re­casts up­wards due to the po­si­ti­ve out­look, the in­creased (or­ga­nic) growth mo­men­tum and the ex­pec­ted re­co­very of the ad­ver­ti­sing mar­ket. In view of their strong Q1 per­for­mance, their sus­tained high growth mo­men­tum and the con­fir­ma­ti­on of the po­si­ti­ve out­look, we are con­fir­ming our pre­vious sa­les and ear­nings esti­ma­tes for the cur­rent fi­nan­cial year and sub­se­quent ye­ars. Ac­cor­din­gly, we con­ti­nue to ex­pect sa­les of € 352.18 mil­li­on and EBITDA of € 100.08 mil­li­on for the cur­rent fi­nan­cial year 2024. For the sub­se­quent fi­nan­cial ye­ars 2025 and 2026, we ex­pect sa­les (EBITDA) of € 389.51 mil­li­on (€ 113.35 mil­li­on) and € 437.03 mil­li­on (€ 130.67 mil­li­on) re­spec­tively.

MGI re­cent­ly an­noun­ced its in­ten­ti­on to ch­an­ge the com­pa­ny name to Ver­ve. The me­dia busi­ness is al­re­a­dy ope­ra­ting un­der this name. The name ch­an­ge marks the suc­cessful com­ple­ti­on of MGI’s trans­for­ma­ti­on into a lea­ding di­gi­tal me­dia com­pa­ny. At the same time, plans were an­noun­ced to ex­pand the Board by one per­son and to ap­point two new Board mem­bers with pro­ven me­dia ex­per­ti­se. Greg Co­le­man (USA) was Pre­si­dent and Board Mem­ber at the Huf­fing­ton Post, BuzzFeed and Cri­teo, among others, and Pe­ter Hui­j­boom (Ne­t­her­lands) was CEO Glo­bal Me­dia and CEO Glo­bal Cli­ents at the ad­ver­ti­sing agen­cy Dentsu. Both an­nounce­ments re­flect the clear fo­cus on the fur­ther ex­pan­si­on of the ad­ver­ti­sing busi­ness, but are still sub­ject to the ap­pr­oval of the An­nu­al Ge­ne­ral Mee­ting.

Over­all, the MGI Group should be able to si­gni­fi­cant­ly in­crease the pace of growth com­pared to the pre­vious year thanks to its good mar­ket po­si­tio­ning (espe­ci­al­ly in the US mar­ket) and the ex­pec­ted re­co­very of the ad­ver­ti­sing mar­ket. Its in­no­va­ti­ve cus­to­mer so­lu­ti­ons (AI tar­ge­ting so­lu­ti­ons, etc.) in par­ti­cu­lar should make a si­gni­fi­cant con­tri­bu­ti­on to boos­ting its cus­to­mer base and ad tech plat­form re­ve­nue in the fu­ture.

Ba­sed on our un­ch­an­ged fo­re­casts for the cur­rent fi­nan­cial year 2024 and the fol­lo­wing ye­ars, we have main­tai­ned our pre­vious pri­ce tar­get of € 4.50 (pre­vious­ly: € 4.50). In view of the cur­rent share pri­ce le­vel, we the­r­e­fo­re con­ti­nue to as­sign a ‚BUY‘ ra­ting and see si­gni­fi­cant up­si­de po­ten­ti­al in the MGI share. The re­sults of our peer group ana­ly­sis (see p. 20) also sup­port our as­sess­ment of the at­trac­ti­ve­ness and up­si­de po­ten­ti­al of MGI shares.

You can down­load the re­se­arch here:
http://​www​.more​-ir​.de/​d​/​2​9​7​7​7​.​pdf

Cont­act for ques­ti­ons
GBC AG
Hal­der­stras­se 27
86150 Augs­burg
⁰⁸²¹⁄₂₄₁₁₃₃ 0
research@​gbc-​ag.​de
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Of­fen­le­gung mög­li­cher In­ter­es­sens­kon­flik­te nach § 85 WpHG und Art. 20 MAR. Beim oben ana­ly­sier­ten Un­ter­neh­men ist fol­gen­der mög­li­cher In­ter­es­sen­kon­flikt ge­ge­ben: (5a,5b,7,11); Ei­nen Ka­ta­log mög­li­cher In­ter­es­sen­kon­flik­te fin­den Sie un­ter: http://​www​.gbc​-ag​.de/​d​e​/​O​f​f​e​n​l​e​g​ung
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Date (time) of com­ple­ti­on: 16/05/2024 (8:20 am)
Date (time) of first dis­tri­bu­ti­on: 16/05/2024 (11:00 am)

——————-trans­mit­ted by EQS Group AG.——————-

The is­suer is so­le­ly re­spon­si­ble for the con­tent of this re­se­arch.
The re­sult of this re­se­arch does not con­sti­tu­te in­vest­ment ad­vice
or an in­vi­ta­ti­on to con­clude cer­tain stock ex­ch­an­ge tran­sac­tions.