SF

Stillfront Group

Initiating coverage

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Stillfront: Siege the opportunity

Redeye initiates coverage of Stillfront Group which we view as a diversified bet on the Gaming industry. An investor gets a company with a strong portfolio of game titles, new releases with great promise and the added bonus of attractive acquisitions conducted by a management team with a strong track-record.

We believe that the market has overlooked some major value enhancing triggers that will materialize in the near-term: Simutronics upcoming title Siege: Titan Wars has blockbuster potential according to us. Other triggers lie in the revenue boost for Bytro’s titles when they are mobile compatible, development and launch of the in-house title at Coldwood and more. An adoption to IFRS would reveal the underlying profitability and show the discount to peers more clearly.

Through our DCF using conservative assumptions we derive with an estimated fair value, in Base-case, of 105 SEK per share. Our valuation ranges from 32 SEK per share in Bear-case to 210 SEK in Bull-case. In conclusion, we find Stillfront conservatively valued and consider the company as an attractive risk-reward from an investment perspective.

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