Ori­gi­nal-Re­se­arch: Me­dia and Games In­vest SE (von GBC AG): BUY

Re­se­arch | 7 De­zem­ber 2023 00:00

Ori­gi­nal-Re­se­arch: Me­dia and Games In­vest SE – from 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 Com­ment
Re­com­men­da­ti­on: BUY
Tar­get pri­ce: 4.05 EUR
Last ra­ting ch­an­ge:
Ana­lyst: Mar­cel Gold­mann, Cos­min Fil­ker

Nine months 2023: So­lid sa­les and ope­ra­ting ear­nings per­for­mance de­spi­te chal­len­ging con­di­ti­ons; po­si­ti­ve ef­fects from the in­itia­ted sa­vings pro­gram­me en­ab­led an in­crease in pro­fi­ta­bi­li­ty; GBC esti­ma­tes and pri­ce tar­get con­firm­ed

Busi­ness per­for­mance 9M 2023

Me­dia and Games In­vest (SE) pu­blished its nine-month and Q3 fi­gu­res for the cur­rent fi­nan­cial year on 30 No­vem­ber 2023. Ba­sed on the­se fi­gu­res, the ad tech group saw a mo­de­ra­te de­cli­ne in di­gi­tal Group re­ve­nue of 3.6% to € 223.27 mil­li­on in the past nine months (9M 2022: € 231.55 mil­li­on), pri­ma­ri­ly due to dive­st­ments (in the games seg­ment) and un­fa­voura­ble ex­ch­an­ge rate de­ve­lo­p­ments. The re­ve­nue ge­ne­ra­ted was pri­ma­ri­ly dri­ven by the tra­di­tio­nal­ly lar­gest ad­ver­ti­sing seg­ment ‚Sup­p­ly Side Plat­form‘ (re­ve­nue share: 89.7%), which ge­ne­ra­ted re­ve­nue of € 200.35 mil­li­on (9M 2022: € 209.65 mil­li­on).
Ac­cor­ding to the com­pa­ny, an or­ga­nic in­crease in con­so­li­da­ted sa­les was achie­ved on a com­pa­ra­ble ba­sis. This re­ve­nue growth is pri­ma­ri­ly the re­sult of an in­crease in the soft­ware cus­to­mer base and the vo­lu­me of ad­ver­ti­sing pla­ced. The num­ber of cus­to­mers on MGI’s di­gi­tal ad­ver­ti­sing plat­form in­creased si­gni­fi­cant­ly by 9.0% to 2,068 soft­ware cus­to­mers at the end of the third quar­ter com­pared to the same quar­ter of the pre­vious year (soft­ware cus­to­mers at the end of Q3 2022: 1,898). At the same time, the di­gi­tal ad­ver­ti­sing vo­lu­me de­li­ver­ed in­creased si­gni­fi­cant­ly by 8.0% to 186 bil­li­on at the end of the third quar­ter (ad­ver­ti­sing ads at the end of Q3 2022: 172 bil­li­on).

Thanks to the no­ti­ceable ex­pan­si­on of the soft­ware cus­to­mer base, the Ad-Tech Group was able to per­form well amid the chal­len­ging mar­ket si­tua­ti­on and thus slight­ly over­com­pen­sa­te for ne­ga­ti­ve mar­ket aspects such as re­du­ced cus­to­mer ad­ver­ti­sing bud­gets and lower CPMs (cost-per-mile).

In ad­di­ti­on, fur­ther mar­ket share was gai­ned, en­ab­ling this tech­no­lo­gy com­pa­ny to fur­ther ex­pand its lea­ding mar­ket po­si­ti­on. Ac­cor­ding to a re­cent Pix­a­la­te mar­ket stu­dy, MGI’s sub­si­dia­ry Ver­ve Group re­mains the mar­ket lea­der on An­droid and iOS in the US mar­ket with a mar­ket share of 11.0% and 28.0% re­spec­tively. In Eu­ro­pe, Ver­ve re­cent­ly achie­ved a mar­ket-lea­ding po­si­ti­on on An­droid (No. 2 with a mar­ket share of 15.0%) and iOS (No. 3 with a mar­ket share of 9.0%). In our view, MGI has thus out­per­for­med the ge­ne­ral ad­ver­ti­sing mar­ket and the ad­ver­ti­sing in­dus­try as a who­le.

In con­trast to the sa­les trend, 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). EBITDA in­creased dy­na­mi­cal­ly by 73.6% to € 101.15 mil­li­on com­pared to the same quar­ter of the pre­vious year (9M 2022: € 58.28 mil­li­on). Ad­jus­ted for one-off ef­fects (e.g. M&A and res­truc­tu­ring cos­ts or reva­lua­tions of ba­lan­ce sheet items), ad­jus­ted EBITDA (Adj. EBITDA) to­tal­led € 63.50 mil­li­on, which was slight­ly hig­her than in the same pe­ri­od of the pre­vious year (9M 2022: € 61.70 mil­li­on).

In terms of ope­ra­ting pro­fi­ta­bi­li­ty, an in­crease in pro­fi­ta­bi­li­ty to 28.4% (9M 2022: 26.6%) was achie­ved on the ba­sis of the ad­jus­ted EBITDA mar­gin (Adj. EBITDA mar­gin). This im­pro­ve­ment in pro­fi­ta­bi­li­ty re­flects the first po­si­ti­ve ef­fects of the company’s cost-cut­ting pro­gram­me, which is ex­pec­ted to ge­ne­ra­te an­nu­al cost sa­vings of around € 10.0 mil­li­on once suc­cessful­ly im­ple­men­ted.

Af­ter the first nine months of the fi­nan­cial year, con­so­li­da­ted net in­co­me (af­ter mi­no­ri­ty in­te­rests) to­tal­led € 41.83 mil­li­on (9M 2022: € 8.77 mil­li­on), which was si­gni­fi­cant­ly hig­her than the pre­vious year’s le­vel. This si­gni­fi­cant in­crease in net in­co­me was main­ly due to the po­si­ti­ve one-off ef­fect from the reva­lua­ti­on of an M&A‑related pay­ment ob­li­ga­ti­on de­scri­bed abo­ve.

Busi­ness de­ve­lo­p­ment Q3 2023

The ne­ga­ti­ve ef­fects of dive­st­ments and un­fa­voura­ble ex­ch­an­ge rate de­ve­lo­p­ments were par­ti­cu­lar­ly no­ti­ceable in the third quar­ter. Ac­cor­din­gly, the MGI Group suf­fe­r­ed a si­gni­fi­cant year-on-year de­cli­ne in di­gi­tal Group sa­les of 10.6% to € 78.34 mil­li­on (Q3 2022: € 87.62 mil­li­on). Ad­jus­ted for the­se ne­ga­ti­ve cur­ren­cy ef­fects, ho­we­ver, or­ga­nic sa­les growth of 1.0% was achie­ved at Group le­vel, ac­cor­ding to the com­pa­ny. This re­ve­nue growth was pri­ma­ri­ly the re­sult of an in­crease in the soft­ware cus­to­mer base and the vo­lu­me of ad­ver­ti­sing de­li­ver­ed.

At ope­ra­ting ear­nings le­vel, ad­jus­ted EBITDA (Adj. EBITDA) of € 23.10 mil­li­on was achie­ved, main­ly thanks to ef­fi­ci­en­cy gains from the cost-sa­ving pro­gram­me that has been in­itia­ted, thus con­fir­ming the high ear­nings le­vel of the pre­vious year (Q3 2022: € 23.00 mil­li­on). At the same time, the ad­jus­ted EBITDA mar­gin in­creased si­gni­fi­cant­ly to 29.5% (Q3 2022: 26.3%)

Fo­re­cast and pri­ce tar­get

Against the back­drop of the company’s so­lid per­for­mance in the first nine months of 2023, MGI’s ma­nage­ment has con­firm­ed its pre­vious­ly ad­jus­ted gui­dance (da­ted 31 Au­gust 2023) for the cur­rent 2023 fi­nan­cial year with the pu­bli­ca­ti­on of its nine-month and Q3 fi­gu­res. Ac­cor­din­gly, the tech­no­lo­gy com­pa­ny con­ti­nues to ex­pect con­so­li­da­ted sa­les of around € 303.0 mil­li­on and Adj. EBITDA of € 93.0 mil­li­on. At the same time, the com­pa­ny has also con­firm­ed its me­di­um-term gui­dance (Re­ve­nue CAGR: 25.0% to 30.0%; Adj. EBITDA mar­gin: 25.0% to 30.0%). As a re­sult, MGI an­ti­ci­pa­tes si­gni­fi­cant­ly hig­her growth mo­men­tum again in the me­di­um term on the ba­sis of an ex­pec­ted re­co­very in the ad­ver­ti­sing mar­ket.

Over­all, we re­main con­vin­ced that the ad tech group will be able to re­turn to growth from the 2024 fi­nan­cial year on­wards, ba­sed on the gra­du­al re­co­very of the ad­ver­ti­sing mar­ket that we ex­pect. In par­ti­cu­lar, the MGI Group’s strong po­si­tio­ning in the growth are­as of pro­gram­ma­tic ad­ver­ti­sing and con­nec­ted TV (CTV) in com­bi­na­ti­on with in­no­va­ti­ve ad­ver­ti­sing so­lu­ti­ons (Mo​ments​.AI, ATOM etc.) should en­su­re fur­ther mar­ket share gains and a si­gni­fi­cant out­per­for­mance com­pared to the ge­ne­ral ad­ver­ti­sing in­dus­try in the fu­ture. The si­gni­fi­cant ex­pan­si­on of their soft­ware cus­to­mer base achie­ved in re­cent quar­ters also pro­vi­des a good ba­sis for dri­ving (or­ga­nic) growth even more stron­gly.

In light of the company’s so­lid per­for­mance, the con­firm­ed out­look and their pro­mi­sing growth stra­tegy, we con­firm our pre­vious re­ve­nue and ear­nings esti­ma­tes for the cur­rent fi­nan­cial year and sub­se­quent ye­ars. Ac­cor­din­gly, we also con­firm our pre­vious pri­ce tar­get of € 4.05 per share. With re­gard to the cur­rent share pri­ce le­vel, we the­r­e­fo­re con­ti­nue to as­sign a ‚buy‘ ra­ting and see si­gni­fi­cant up­si­de po­ten­ti­al in the MGI share.

Die voll­stän­di­ge Ana­ly­se kön­nen Sie hier down­loa­den:

Kon­takt für Rück­fra­gen
Hal­der­stras­se 27
86150 Augs­burg
0821241133 0
Of­fen­le­gung mög­li­cher In­ter­es­sens­kon­flik­te nach § 85 WpHG und Art. 20 MAR. Beim oben ana­ly­sier­ten Un­ter­neh­men ist fol­gen­der mög­li­cher In­ter­es­sen­kon­flikt ge­ge­ben: (5a,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
Date (time) of com­ple­ti­on: 07/12/2023 (9:35 am)
Date (time) of first dis­tri­bu­ti­on: 07/12/2023 (10:30 am)

——————-über­mit­telt durch die EQS Group AG.——————-

Für den In­halt der Mit­tei­lung bzw. Re­se­arch ist al­lei­ne der Her­aus­ge­ber bzw. Er­stel­ler der Stu­die ver­ant­wort­lich. Die­se Mel­dung ist kei­ne An­la­ge­be­ra­tung oder Auf­for­de­rung zum Ab­schluss be­stimm­ter Bör­sen­ge­schäf­te



Hal­der­stra­ße 27
86150 Augs­burg

Pho­ne: +49 821 241133–0
E‑mail: office(@)gbc-ag.de

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