11 bit studios: risk profile increased materially (downgraded to HOLD)
We have downgraded 11 bit studios to HOLD (from Buy), cutting our 12M price target (PT) to PLN 355 (from PLN 840), which implies a limited 14% potential upside. Following the market’s disappointment with the release of Frostpunk 2, the stock has fallen sharply, by 51% since 17 September. As a result, the 2024E valuation multiples may appear undemanding vs. its peers. However, we believe that, with the disappointment from 11B’s strongest IP, the company’s risk profile has increased materially, so a greater discount vs. its global peers should be applied. As a result of our downward revision of our sales volume assumptions not just for Frostpunk 2, but also the two new IPs to come (The Alters and Projekt 8), we have cut our 2024-26E net profit forecasts by 43-49%. Its P/E, based on the average 2024-28E EPS, amounts to 9.8x, a 47% discount vs. its global peers, which we now see as justified, to a great extent.11 BIT STUDIOS SA is a Poland-based company engaged in the game development industry. Its product portfolio includes four games: Anomaly Korea, Sleepwalker's Journey, Funky Smugglers and Anomaly Warzone Earth. The Company produces video games for different devices, such as video consoles, personal computers (PC), and Apple products (iPhone, iPad), among others.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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