Gaming Realms - Update
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.
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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.
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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
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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.
Gaming Realms is a developer, publisher and licensor of mobile games. Co.'s principal activities is that of an online bingo and casino operator, the provision and marketing of interactive bingo and casino services to customers in the U.K. and social gaming on Facebook and mobile to customers in the U.S. and Europe. Co. has three reportable segment. The social publishing provides freemium games to the U.S. and Europe. Licensing includes IP brand and content licensing to partners in the U.S. and Europe. The real money gaming products and marketing services operates Co.'s brands and provides other digital marketing services to both gaming and non-gaming clients in the U.K.
Align Research is a commissioned research company founded in November 2015 in order to provide the under-served smaller company space with high quality analysis. We have an initial focus on the natural resources sector, in which we see significant opportunities given the current once in a generation bear market, however all undervalued small caps (sub £100m) are considered by our team. Align was founded by industry professionals with decades of experience in the stock markets, headed up by highly qualified individuals from both fund management and analytical backgrounds.
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