Edison Investment Research - Game Digital (GMD) Game Digital - Part of the retail answer

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Edison Investment Research

Game Digital - Part of the retail answer

Even as Game Digital (GMD) faces short-term trading pressure, its developing BELONG gaming arena concept is arguably part of the answer of what to do with the UKâ€™s high streets and shopping centres. The first BELONG sites under the February 2018 agreement with Sports Direct are now opening. With GMDâ€™s share price still less than net cash of 32p, neither the existing business, which currently contributes Â£10m of EBITDA, nor BELONG which we value at 23p, are attributed any value by the market. Our total valuation is 75p.

12/09/2018 15 EN

Underlying

Game Digital

Game Digital provides gaming and gaming-related products, including hardware, console physical content, console digital content, non-console digital content, accessories, licensed merchandise and own-label products in the U.K. and Spain. Co. also sells mobile devices and movies, provides gaming experiences in-store on consoles, personal computers and virtual reality devices and operates community-based gaming activities including gaming events and esports, digital hosting services for businesses and customers for multiplayer gaming. Also, Co. operates a software development business focusing on visual recognition and augmented reality technologies. At Jul 31 2017, Co. operated 572 stores.

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GB00BMP36W19 United Kingdom

Provider

Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

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Game Digitalâ€™s (GMDâ€™s) core retail business performed well in a challenging market, with material planned cost savings absorbing an anticipated 1.4% decline in gross transaction value (GTV) and helping to deliver H119 EBITDA growth of 22%. We reduce our FY19 and FY20 EBITDA forecasts by c 8%, primarily reflecting current market headwinds and a shift in BELONG arena openings into subsequent years. The current share price represents a significant discount to our valuation of 69p.

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Against a challenging retail landscape, Game Digital (GMD) delivered a solid sales performance and growth in higher-margin categories over the peak trading period, alongside ongoing cost efficiencies, which continue to counter trading pressures. Momentum in the BELONG roll-out, which accounts for a significant part of our 67p valuation, remains crucial.

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Game Digital - Part of the retail answer

Game Digital - Suspension of estimates

Game Digital - Good performance in a challenging market

Game Digital - Resilience over the peak trading period

Basilea Pharmaceutica - Cresemba milestone payments continue to roll in

AAC Clyde Space - Solid start to the year with further order growth

Tinexta - Typical seasonality in Q124

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