Northern Lights

MTG (Buy, TP: SEK440.00) - No signs of distractions

In light of the many things occupying management’s time lately (e.g. failed TDC bid process and upcoming company split), we find MTG’s performance impressive (Q1 organic revenue and EBIT up 9% and 23% YOY, respectively). We have raised our 2018–2020e adj. EBIT by 1–3%, reflecting a somewhat more positive outlook for Nordic Entertainment. We have raised our target price to SEK440 (435) and keep our BUY.

Northern Lights

MTG (Buy, TP: SEK435.00) - Q2 should set the tone

We expect solid Q1 earnings YOY following healthier MTGx (Innogames balancing the esports losses). To reflect the divestment of Bulgaria, we have cut our 2018e–2019e EBIT by 7–9% but the cash injection has kept our SOTP-based target price at SEK435. To us, key catalysts include the split in H2 2018, further MTGx earnings improvements, and signs of healthy progress in Nordic Entertainment. We retain our BUY. The company is set to report at 07:30 CET on 23 April.

Northern Lights

MTG (Buy, TP: SEK435.00) - More signs of the times

We think TDC’s proposed bid for MTG Nordics was at a fair valuation, and the timing probably could not have been better for MTG after the strong 2017. We have raised our MTG 2019e group EPS by 5%, and value MTGx at an EV of SEK10.4bn (2.6x 2019e EV/sales), 51% above the current implied valuation based on the MTG’s and TDC’s current share prices. We have raised our target price to SEK435 (410) based on our new SOTP and reiterate our BUY recommendation.

Lower MTGx losses in sight

We expect solid Q3 earnings (results due 19 October at 07:30 CET) driven by the Nordics, Innogames and lower eSports losses. Looking ahead, we see rising profitability in MTGx on improving eSports monetisation and healthy Innogames profit. In our view, investors prefer group earnings to be driven by MTGx rather than Nordic Entertainment. We have raised our target price to SEK350 (345) and maintain our BUY recommendation.

Closer to game-changing times

MTG (MTGB SS, Buy) - Closer to game-changing times (15 pages)