Games Workshop Group - Strong revenue growth and royalties income
Games Workshop Group’s (GAW’s) trading update for the year ending May 2022 indicates ongoing good demand following the standout performance of the prior year. The lower profitability (profit before tax margin) for FY22 versus FY21 reflects the already-flagged economy-wide inflationary cost pressures and internal investment, offset by a notable improvement in royalties income (£28m versus £16.3m FY21). The royalties income was the highest ever generated by the company, indicating the success it is having in leveraging its intellectual property. We trim our FY22 and FY23 profit before tax (PBT) estimates by c 2%. The prospective P/E multiple of 15.9x is below recent average multiples (17.2x FY17-21).Games Workshop and its subsidiaries designs and manufactures miniature figures and games and distributes these through its own network of retail stores, independent retailers and direct via the internet and mail order. Co. has manufacturing activities in the U.K. and sells mainly in Europe, North America and Asia Pacific.
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