Following the recently announced acquisitions (8 in total), we raise our sales estimates by 7-14% for ’21/22e-‘23/24e, where the largest contributor is Crazy Labs, which has been added to the DECA Games segment. After accounting for the dilution of the transactions (upfront + earnouts) ,we raise our adj. EPS estimates by 1-5% for ’21/22e-’23/24e.
We adjust our fair value range to SEK 225-350 per share following our estimate changes. Embracer is currently trading at an f12m EV/adj. EBIT of 15.6x, according to FactSet consensus, which is 18% below the five-year average. This is despite Embracer having its largest new game pipeline ever this fiscal year, with a SEK 2.8-3.3bn development cost (recent not M&A included), plenty of M&A headroom even after the latest acquisitions (~SEK 20bn) and estimated 30% organic growth (ABGSCe) in a year where most gaming companies are struggling with growth.
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