PlayWay – Scaling a proven business model
The PlayWay Group (PLW) specialises in the development of mid-range and low-budget games for all platforms. PLW’s net profit increased from PLN 5.7m in 2016 to PLN 87m in 2019 as a result of a strategy focusing on the production of multiple games at a relatively low budget with an attractive concept, supporting strong diversification and minimising operational risk. Growing earnings have been coupled with an increase in the number of developer teams as well as subsidiaries and associates, growing to 11/38/50/63 respectively in 2016/2018/2019/July 2020. Some of the Group’s members have been floated on GPW/NewConnect while others are planning to go public in the coming quarters. Importantly, the Group’s growing reach with players and its business experience help to grow the commercial potential of new games. With new games already announced, we expect that the number of projects with a strong commercial potential will rise from 4 in 2019 to 13 in 2020 and 20 in 2021 (estimates based on the Steam Wishlist), which should bolster the Group’s earnings. According to available data, the Group has announced the release of 110 games in the coming years, equal to approx. 12% of all games on the Steam Wishlist. On that basis, we expect its sales to grow by 33%/106% and the net profit by 21%/74% YoY in 2020 and 2021 respectively. According to our projections, the company’s current valuation is 17.5x/17.5x P/E’21/22. We recommend to accumulate PLW stock with a target price of PLN 549.
Playway SA. Playway SA is a Poland-based company engaged in the computer games development. The Company's activities are divided into two business segments: Computer games and Mobile games. The Computer games division focuses on creating and distributing games for Windows and Mac operating systems. Its game titles include Hard West, Car Mechanic Simulator, Professional Farmer 2014 and Ancient Space, among others. The Mobile games division produces and publishes games, such as Car Mechanic Simulator 2014 Mobile, Cook It Up and Diner Mania, for mobile devices with Android and iOS operating systems. In addition, it develops games for consoles, including PlayStation (PS) and Xbox. The Company distributes its products mainly through online platforms, such as Steam, App Store and Google Play. The Company controls a number of subsidiaries, such as CreativeForge Games SA, Madmind Studio Sp z oo, Atomic Jelly Sp z oo and Fishing Games Sp z oo.
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