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Third party research

G5 Entertainment: Not as dramatic as it looks - ABG

G5 Entertainment

This is a third party research report and does not necessarily reflect our views or values

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Q1 adj. EBIT -1% vs ABG, but -10% vs. consensus
We cut adj. EBIT by 14-9%, whereof 8% relates to FX
Share is trading at 5-3x EBIT adj, 8% dividend yield


Still waiting for new games to turn growth trend around

Q1 showed similar trends as Q4. Sales declined 13% y-o-y and were 4% below our expectations, although EBIT adjusted for non-cash FX effects was only 1% below. The margins were better, which is explained by both from better mix (higher share of G5 Store), and lower user acquisition cost, which we view as more temporary. Reported EBIT, which included SEK 15m from FX revaluations, declined by 73% y-o-y while adjusted EBIT fell 15%, more in line with sales. G5 Store continued to impress, comprising 21% of group sales with sales growing 35% y-o-y. The fact that Apple now will allow publishers to link to outside stores in-app should fuel continued further growth for G5 Store, which should be supportive of earnings growth.
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