Business
Align Research Initiation of coverage
Align Research Initiation of coverage.
About this update from Gaming Realms Plc
[{"type":"text","content":"\n \nRNS Number : 0817R Gaming Realms PLC 19 September 2017 \n\nGaming Realms - Initiation of Coverage Conviction Buy recommendation. Price Target 17.8p\nGame on for profitable growth in 2017 and beyond\nGaming Realms is a developer, publisher and licensor of mobile and web based real money and social games. The business was set up by the team behind Cashcade Limited, creator of bingo brand Foxy Bingo, which was sold to PartyGaming for just under £96 million in 2009.\nStrategy focused on exploiting valuable range of IP\nGaming Realms has developed and acquired a host of popular games, including the flagship \"Slingo\" brand. The focus is upon exploiting this IP across its real money, social gaming and licensing divisions, with the strategy being to allocate capital towards the more profitable real money gaming and content licensing operations.\nTraction seen in trading with 2017 profitability imminent\nFollowing a 60% rise in revenues in the 2016 financial year, followed by positive trading in the first half of 2017, the business is on the cusp of profitability. Management expect the business to be significantly EBITDA positive for FY2017 and we expect an acceleration in profits after that.\nFundraise and deferred consideration agreement reduce uncertainty\nA recent £1.13 million subscription has provided funds for growth, with several directors taking part. Crucially, a deferred consideration payment of $4 million previously due in August this year has been deferred to December, with the company currently organising debt facilities to pay the now $4.5 million liability.\nShares undervalued on a number of metrics\nShould Gaming Realms successfully meet our forecasts for 2018 and 2019 the shares would trade on very low multiples of EBITDA and, more importantly, cashflow. We set an end 2019 target price of 17.8p for the shares and initiate coverage with a Conviction Buy stance.\nTo read the full note visit http://www.alignresearch.co.uk/cpt-company/gaming-realms/\n \n\nThis information...