Media and Games Invest: Solid start to the year
Research Update
2024-05-08
07:20
Redeye updates its view on Media and Games Invest (MGI) following its Q1 2024 report, which demonstrated solid organic growth of 21% while maintaining a healthy intake of new customers. The announced FY 2024 guidance is in line with our expectations, and we have made limited estimate revisions on the back of the report.
Anton Hoof
MGI delivered a strong Q1 as expected, and net sales increased 21% organically while coming in 2% above our estimates. In terms of profitability, margins were somewhat weaker than expected, and Adj EBITDA came in at EUR22m (19), with a margin of 27% (28). This was 3% below our estimates of EUR22.7m. Adj EBIT (excl PPA) came in at EUR16.6m (15.1), yielding a margin of 20% (22). Overall, we consider the report to be solid, especially in terms of top-line.
MGI provided new guidance for 2024 in conjunction with the report, forecasting net sales of EUR350m-370m and Adj EBITDA of EUR100m-110m for the full year. This implies a growth rate of 9%-15% and an Adj EBITDA margin of approximately 29%. The guidance aligns with our expectations, and we believe the upper end of the range is achievable given the strong start to the year and the ongoing recovery of the advertising market.
On the back of the Q1 2024 report and FY 2024 Guidance being in line with our estimates, we have made limited estimates revisions. We anticipate continued solid organic growth throughout the year, particularly in Q2-Q3, where comparables are more favorable. Our fair valuation range remains at SEK12-SEK42, with the base case of SEK30. Our base case of SEK30 corresponds to 7x EV/Adj EBIT in 2025e.
| EURm | 2022 | 2023 | 2024e | 2025e | 2026e |
| Net Sales | 324.4 | 322.0 | 360.2 | 398.6 | 420.3 |
| Sales Growth | 28.7% | -0.8% | 11.9% | 10.7% | 5.4% |
| EBITDA | 84.8 | 128.4 | 100.6 | 120.5 | 128.4 |
| EBIT | 26.6 | 99.0 | 69.7 | 87.5 | 94.7 |
| EBIT Margin | 8.2% | 30.7% | 19.3% | 22.0% | 22.5% |
| Net Income | -20.4 | 46.1 | 14.5 | 39.0 | 44.3 |
| EV/Sales | 1.6 | 1.3 | 1.5 | 1.3 | 1.1 |
| EV/EBITDA | 6.3 | 3.3 | 5.2 | 4.2 | 3.6 |
| EV/EBIT | 20.1 | 4.3 | 7.6 | 5.7 | 4.8 |
Media and Games Invest (MGI) followed up a strong year-end with an even stronger Q1 in terms of growth, growing 21% organically (adjusted for fx). Sales in the quarter were primarily supported by a 30% y/y increase in software clients, increased advertising budgets from existing customers, and rising demand for ID-less solutions.
Disclosures and disclaimers