We raise adj. EBIT by 25% for 20/21e and 7.0% for 22/23e based on the inclusion of the 8 new acquisitions, of which 4A Games and DECA Games are the major contributors, and because of the strong report. On a different note, we find it very positive that Embracer appears to be maturing as a company and responding to past criticism. It will now start reporting organic growth for the Games segment, management provided a thorough breakdown of earn-out provisions and preparations for a transition to IFRS 16 appear to be well underway. This increases transparency, and with a possible listing on Nasdaq Stockholm Mid/Large cap, the stock could attract new groups of investors.
SOTP fair value up to SEK 130-181 per share (104-141)
Based on our updated estimates, which are based on the inclusion of the 8 new acquisitions and the strong Q1 report, our SOTP fair value range increases to SEK 130-181 (104-141) per share, see page 9 for details. Additionally, we find that at the current share price, Embracer is trading at an f12m EV/adj. EBIT of ~23x, which is in line with our peer group median and ~25% above the historical average f12m EV/adj. EBIT.
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