We keep our estimates intact after revisiting the performance of G5’s games in Q2’21e.
We maintain our DCF fair value range of SEK 415-750 per share since we keep our estimates intact. We note that following the recent share price decline (-35% since the peak on 3 May) G5 is now trading at a f12m EV/EBIT of 11.3x, according to FactSet consensus, which is 0.9% above the six-year historical average. On ’22e, this declines to a single-digit EV/EBIT and a FCF yield of ~7%. We acknowledge that investor sentiment towards gaming has soured during the last few months, as gaming companies face tough COVID-19-boosted comparables in Q2/Q3’21e. However it is worth noting that G5 currently has several tailwinds owing to the following: 1) Windows lowering its store fee from 30% to 12% will kick in during Q3’21e and drive the gross margin and 2) G5’s new generation of games continues to perform well in terms of gross rankings, further boosting the gross margin.
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