Frontier Developments Share Discussion Threads

[makw61] 03/7/2018 09:30

If £88m is before steam charges etc (i.e. steam charges are treated as a cost of sale), then £88m x 70% gives £62m. Assume salaries and overheads of £40m gives £22m less 20% corp tax gives around £18m of earnings, which is around 47p eps. I assume that's how the broker calc goes.

The important thing is that imo we are only at the start of the upgrade cycle, so the exact numbers are not that important at this stage. Lots of good news to come.

I get the impression that the other model they are looking at is publishing for third parties. Seems like an attractive, low-risk model. Personally i don't like acquisitive companies and i don't really see David as going down that route either. Acqui-hires are popular with big tech but it seems often to be about dealing with threats as much as expansion, all imho ofc!

[nimbo1] 03/7/2018 09:29

Endion shorting should largely be ignored in most cases - there will always be market participants who believe stocks get expensive at various different points in a companies lifecycle. In my experience it only becomes relevant if it reaches 10% +, as it means many market participants believe there is something actually wrong i.e. accounting or market problems etc. In this case someone probably just thought it looked expensive at £18, and at that point you could have argued it either way.

Hastings - many thanks - Look forward to your comments. Can you please ask him about china?! They were going to launch on tencent's platform as we understood it but we've heard nothing...

Also once the churn is out the way I am hoping we start to get more institutions involved - as highlighted by HPGC this story should prove attractive to them, especially after todays news...but they also take time to mobilise.

[adamb1978] 03/7/2018 09:27

Shanklin

£88m sales implies £62m gross profit @ 70% margin (around historic levels)


Opex was around £10m in H1 in the year just finished, and will have been around £12m in H2 based on their recent guidance. Assume that it keeps ramping to £14m in H1 this year and £16m in H2 (meaning £30m opex in Fy19 vs £22m in Fy18)

That gives £31.6m PBT asssuming no interest.

Tax it at 15% (likely conservative given they will have R&D credits) and you get 71p EPS or 74p if you strip out share based comp

[alphabeta4] 03/7/2018 09:25

Hi Shanklin - there was a £61m forecast with £12.56m earnings, Liberum flag c50% to PBT on their sensitivity forecasts within their previous note (Fdev had 43% on their previous finals so this chimes with some op gearing off the higher revenue). I'd noted Fdev had minimal tax on the interims and previous finals. So £80m becomes £22.06m. 38.7m shares in issue, eps 57.0p.

Edit: I've done £80m as they highlight 'upper end' of range £58m - £88m. Pretty easy to work out other numbers if required.

[endion] 03/7/2018 09:22

Adding together the larger buy trades, i get around 73,000 volume. The short was 193,300. If thats them then they are half way bought back. If not, then theyve still got a long way to go!

[mark4231] 03/7/2018 09:16

I really wasn't expecting a trading update so soon after launch of JWE (and when the physical disc launch is only today) so its great news that they felt the need to do so. I'm feeling very optimistic that this is just the beginning.

[hastings] 03/7/2018 09:15

42p according to the broker, but personally think that will be beaten.Anyway, speaking David and Alex this morning and will pen something later.

[endion] 03/7/2018 09:14

Congrats to all who held out against market sentiment and expectations.

I would to the calculation but have only just woke up :p

My website has a share price calculation detailed. You can substitute numbers to do your own.

[shanklin] 03/7/2018 09:11

Any more takers on what £88m might reasonably be expected to deliver in terms of EPS please?

[shanklin] 03/7/2018 09:08

Worth a read.

[endion] 03/7/2018 09:06

Short is being closed. Multiple 15.1k buys, many, many of them.

[nimbo1] 03/7/2018 08:55

Worth mentioning David Braben likes to be incredibly conservative, he told me so. (It’s great having a likeable, decent and visionary ceo As the companies largest shareholder). It’s why fdev beats expectations. To upgrade this early means only one thing...They’ll be upgraded again.

[discodave4] 03/7/2018 08:48

Top end rev I make it about 50p eps.

[sogoesit] 03/7/2018 08:42

Which makes 44p EPS .... no way!!!

[hastings] 03/7/2018 08:36

Liberum upgraded numbers

[shanklin] 03/7/2018 08:31

hastings

How did you calculate a forward P/E of 35 please?

[hastings] 03/7/2018 08:25

After today's upgrade and the share price movement we stand on a PER of 35!
With net cash expected at £35m and the potential for further upgrades and positive news the journey continues.

[sogoesit] 03/7/2018 08:14

Note the use of the plural in “future franchises in development”.

[adamb1978] 03/7/2018 08:13

One other comment in the RNS: "and we will continue to explore other models to accelerate our scale-up."

Which to me sounds like acquisitions. Shouldn't be a bad thing and presume they're mainly focussed on acqui-hire type acquisitions, rather than buying other game developers

[adamb1978] 03/7/2018 08:10

Think EPS of around £1 is now very likely for FY20, so a share price of say £25-£30 within the next 12 months is also highly likely

[sogoesit] 03/7/2018 08:09

Ha, this board seems to have been ahead of the game... great research and discussion guys!
Expect another update at Results on 5th September.
Upwards and onwards!

[hpcg] 03/7/2018 08:06

mf - yes, for software margin increases with every unit sale. That is why it makes sense to model the fixed cost and the revenue line ex relevant unit cost.

Decent open, lets see how the day develops.

[haggishunter] 03/7/2018 08:06

now that's an opening.

[adamb1978] 03/7/2018 08:06

EPS of 60p - 75p, depending on your measure of EPS and interpretation of 'upper end of...range'

[kamitora] 03/7/2018 07:55

Peel Hunt reiterates buy this morning, finnCap maintain 'Corporate' (previous target 1750), Liberum reiterate buy (previous target 1800)