Frontier Developments Share Discussion Threads

[endion] 27/6/2018 16:57

I was in kws but its just swinging between 18.50 and 16.50 for a couple of months. Sorry for OT.

[czeck] 27/6/2018 16:14

Got out and transferred winnings to KWS this morning. Good timing it seems but good luck everyone!

[sogoesit] 27/6/2018 16:00

Sure, a distribution process during consolidation. Could be a while 'tho so patience needed.
Volume about same as drop of 29/09/2017... quite high.

[endion] 27/6/2018 13:05

You could think of this as shares being handed to longer term holders. Anyone buying now will want a steady rise from here on out.

[mark4231] 27/6/2018 11:25

Even on a P/E of 20, and not counting ED and PC revenue, estimated share price would be above £20 so looks good. Share price still seems to be stuck although at least it isn't falling any more!

[drofdavid] 27/6/2018 11:19

Some good points made by hcpq. The current p/e may be already assuming a successful game in JWE. Safer to reckon on a much lower p/e after the 2018/19 results. But the market may like future announcements, new games etc from the company in due course. Best not to get too excited, but this is a very good company which should do well for its shareholders.

[endion] 27/6/2018 10:07

That is right mark. Using some numbers based on previous years expenditure.

Paradox interactive's p/e ratio is 59.1, TakeTwo is 75.27, Team17 is 72.73. The industry seems to support these numbers.

[mark4231] 27/6/2018 10:02

That is just for revenue from JWE at 4m sales? So, not including ED or PC?

[endion] 27/6/2018 09:58

Including VAT and corporation tax in the calculation I get a share price of £69.97 at p/e 64.01. And £43.73 at p/e 40. Current p/e ratio is 64.01 according to morningstar.

Eps of £1.09 if you want to do your own multiple.

[hpcg] 27/6/2018 09:55

US tax varies state by state and is more often than not a sales tax, not VAT.

New York state 4% (+ in New York City another 4.5%)
Texas 6.25% (+ council by council up to 2%)
California 7.25%
Florida 6%
Illinois 8.75%

The top 3 are the most important in terms of economy size.

No way is this market supporting a 65 multiple but I am pretty sure it will support 20 for organic growth and resilient income. In my adult life video games have gone from 4x a football match ticket to less than 1x.

[endion] 27/6/2018 09:36

Thanks makw61, I noted that VAT now needs to be paid according to the rate in which the country it is sold within Europe. France and Uk are both 20%, Germany 18%, which seem to be our main markets, so 20% would probably be fine to go with I'd imagine.

I may have muddled income and corporation tax. Income tax is taken from employee wages and so would be part of company costs no?

[makw61] 27/6/2018 09:32

Endion, that's right. In fact VAT is not part of revenue at all so the revenue/sales figures in company accounts do not include any VAT as it belongs to the government not the company. In effect the company is an unpaid tax collector for VAT!

Corporation tax is calculated after subtracting company costs so should be the last calculation in the series. Because of R&D tax credits it may be nearer to an effective rate of 15% i would guess.

Finally, 20% for VAT/sales tax is a good number to use but is in fact conservative since rates are lower in e.g. the US. I've seen 10% quoted as an average but not sure where that is derived from?

ATB

[endion] 27/6/2018 09:12

@Drofdavid, I had forgotten about vat, thanks for reminding! So to be clear, vat comes off of total income, then console commision, universal commision and then income tax and company costs? Anything else I may have missed?

[nimbo1] 27/6/2018 08:51

I agree its not great but when you feel most negative is a decent enough time to buy. RSI v oversold etc too.

FWIW I think the current weakness is due to lack of roadmap as much as anything else. (tech sell off etc influences). We were told to expect next title alongside jwe launch and it hasn’t yet appeared.

[czeck] 27/6/2018 08:34

We will be below £10 by mid July at this rate; really hope this will bottomed out soon. The 200-day is currently at 12.95.

[drofdavid] 27/6/2018 07:10

Hi endion

I think the sale price will include vat at 20%, so shouldn't we start by reducing the Revenue figure to allow for this?

[endion] 27/6/2018 00:58

Each unit costs a lowest amount of £44.99. The deluxe edition cost £49.99 and has been outselling the standard in console sales, however to be conservative for this calculation we shall use the basic low price rounded up to £45.

Total Revenue on 4m units: £45 x 4,000,000 = £180,000,000

Minus Steam/Platform commission of 30% = £126,000,000

Minus Universal commission 10% = £113,400,000

Income after tax (20%) = £90,720,000

Total Income before development/company costs = £90,270,000

Development costs for JWE were stated to be 11m, this will come out of 2018 financial year, so the development costs to deduct from this will be those of the fourth franchise (as yet unannounced). But let's assume it's the same at 11m.

£90,720,000 – £11,000,000 = £79,720,000

Minus company costs of £30,000,000 based on previous years:

£79,720,000 – 30,000,000 = £49,720,000

Total Profit : £49,720,000

This number discounts any income from Planet Coaster and Elite, along with any future DLC for JWE.

Earnings Per Share

£49,720,000 / 38,660,000 (shares) = £1.286

Per Earnings Ratio

Current Share Price: £14.45

14.45 / 1.286 = 11.236

This is far lower than the current P/E ratio of 64.06.

Using 64.06 to calculate future share price we get:

1.286 x 64.06 = £82.38

According to this calculation we would get to a share price of £82.38. (570% Growth).

A lower P/E ratio of 40 would get a share price of £51.44. (355% Growth).

DYOR

[nimbo1] 26/6/2018 22:29

Mark we are on the same page - I think we’ll be at 1.5 million by end July. I’ve been playing on the PlayStation and it’s annoyingly addictive, 2 hours can just fly. All the pointers are there.

In this scenario fdev will do their fy revenue target in h1.

[mark4231] 26/6/2018 22:15

I estimate about 500,000 sales so far for the PC and am working with the thought that console sales should be about the same - so with the physical disk release for consoles I would expect JWE to easily be above 1m sales within the next couple of weeks. I'm optimistic though that console sales will outstrip PC sales so it would be even more in that case. I'm absolutely sure the share price is a bargain right now. All my personal speculation... DYOR and all that.

[baggymiggins] 26/6/2018 18:58

JWE physical copy for PS4 is currently number 4 and XBOX number 9 on Amazon for all games across all platforms pre orders (which includes Nintendo and gaming accessories). So very strong there.

[endion] 26/6/2018 18:32

Steam and amazon chart positions added to website. Will probably need a separate page soon as will need to update the positions as it goes. Includes Steam Charts and Amazon UK, USA, France and Germany. Also PS4 and XBOX UK Charts.

www.investfdev.com/fundamental-and-tech-analysis/

[endion] 26/6/2018 18:21

Across all platforms I would hazard a guess of around 700k so far. I would imagine 1m sold after one month, at least in two.

[shanklin] 26/6/2018 18:02

I would like to think we will get an update when there have been 1m JWE sales. But when will that be?

[ck1111] 26/6/2018 17:53

Another method of estimating Steam sales using Steam achievements. It was linked in SteamSpy.

hxxps://barter.vg/browse/players/

JWE is at 462,010 and PC at 1,668,818

[hpcg] 26/6/2018 17:19

Right - and the buyers having to cross the spread to hit the offer indicate the line of stock has at least reached the point they won't sell below. Thus far anyway. I thought that was the case at various other higher prices.