Game Digital Share Discussion Threads

[runthejoules] 07/12/2017 09:42

Wtaf today though?

[5oletrader] 06/12/2017 16:12

US article - N/A to GMD - posting for those interested:

"One of the fastest growing markets in the world is the eSports industry. Assuming the $700 million revenue projection for 2017 holds true, the industry will have seen an annual revenue growth rate of 40%–a truly remarkable feat. What’s more, revenue estimates for 2020 are at an astonishing $1.5 billion, representing a value over ten times the revenue in 2012."

[mirabeau] 05/12/2017 07:30

I thought the same but the two brands are very different so would require a subtle rebranding exercise to pull it off. There are obvious spillovers between the two markets though. Sports retail and gaming share a similar culture - competitive, aggressive, high energy but the two areas could be slowly merged

[nw99] 05/12/2017 07:24

Great idea and very logical

[bookbroker] 05/12/2017 07:09

Sounds logical!

[thevaluehunter] 05/12/2017 06:55

In these belong esports centres I believe they are also selling refreshments.

[mrx9000] 05/12/2017 06:06

Just an idea but what if Ashley bought them and integrated Game inside his sports shops, one overall rent to pay, instead of two. Other examples of this has been Homebase which now have Argos inside and also PCWorld etc.

[kazoom] 04/12/2017 20:53

twistednik

I think you are spot on to say that we cannot consider GMD to be a business PLUS a pot of cash. A significant part of that pot of cash is intrinsic to the business and there are several pointers to this :

(1) In March 15 they declared a chunky special dividend of £25m (14.7p). I can't now find the quote I was looking for but it was something along the lines of wanting to distribute any surplus cash to shareholders. Without finding my original notes, I am at risk of mis-stating the position but at least I will say the cash pile has remained near £50m since then. So I surmise c. £50m (based on the size of the business then) is intrinsic to the business.
(2) Despite the cash-pile they recently expanded their credit facilities (ostensibly to accelerate the roll out of the new format.
(3) Also they cancelled the dividend for the same reason.

[Personally I harbour a hope (With no substantiation whatever!) that they are also preserving flexibility to consider whether a model that seems to work well in the UK and Spain can be applied elsewhere - perhaps by seeking out distressed retail assets. Pure speculation though.]

Basically though what I am trying to say is that to value this business as free cash PLUS a business is plain wrong.

Nevertheless - I do think this is a significantly undervalued business, but I don't think it will miss-out on the UK retail Slowdown.

But on this last point I have been spectacularly wrong so far -so REALLY don't listen to me!!

[gersemi] 04/12/2017 18:21

thanks guys

g

[thevaluehunter] 04/12/2017 15:38

I went to the waldour street store at the weekend to check out what all the fuss was about. There was a street fighter tournament on and you couldn't move for the number of people crammed in there.

[twistednik] 04/12/2017 13:26

Gersemi - a well rated Retail business would probably have a sensible EV/EBITDA in the range of 5.0-7.0x. In this context, if GMD can stabilise performance and increase profit post lease expiry (i.e. exiting unprofitable or marginally profitable stores) than we will hopefully see a significant re-rating.

Quoting cash balances for retail businesses can be hazardous given the large working capital swings they see throughout the year (especially in the lead up to Christmas). It's difficult to separate cash required for working cap with cash in the bank which can be used for investment in dividends, Capex or growth etc.

That said, they are very cash generative businesses so you would expect a handsome inflow post Christmas!

People throwing out valuations net of Cash (i.e. saying the business is thrown in for free) though are off the mark. Any bidder for example would look to buy the business with a 'normalised' working cap position. This means an element of working cap is taken into consideration and netted off the purchase price.

Hope this helps.

TN

[blockchain] 04/12/2017 11:24

Lads

Check out the graph on IDP

Looking a bit good, quick 50pc?

[nikki40] 04/12/2017 10:38

Of course it is pocket money for him. Esp with cash in bank at gmd

[gersemi] 04/12/2017 10:23

I wonder if Ashley, following his sale of Newcastle FC, will launch a full bid for GMD with the proceeds?

[gersemi] 04/12/2017 10:01

No stopping this at present. Either trading is ahead or Ashley will take it private but then it could buying because it's perceived as undervalued

[nw99] 01/12/2017 14:21

It's looking good

[gersemi] 01/12/2017 10:54

This is revving up again. Xmas now in full swing

[gersemi] 01/12/2017 06:20

part of the article -

When they opened the first ‘BELONG’ arena inside the Manchester Trafford Centre store last year, GAME spied a piece of driftwood to keep them afloat in uncertain waters. And with plans to have 35 venues operational by the end of 2018, it is no coincidence that they maintained a grip on Insomnia, one of the biggest platforms for esports in the country.

“Though our markets remained volatile last year, we made solid strategic progress as we continued to focus on those elements within our control; delivering on each of the four pillars of our strategy and creating a new cost base for our UK retail business,” said Martyn Gibbs, CEO of Game Digital, in a statement earlier this month.

“We have reviewed our operations and are now accelerating development plans as we seek to fully capitalise on the strong growth potential in the growing esports market”.

Retention of Insomnia, investment in local arenas, and a perennial hold on the UK game retail market positions GAME with a connection to every aspect of the UK esports industry, from grassroots to professional. And with game sales and local internet cafes creating an interest in competitive gaming that will bring people to events, and with their events in turn driving an interest in game sales, GAME might have finally cracked the code for a successful business model in the digital era.

The next two to three years will be telling. If GAME is to double down on its esports focus, expect BELONG arenas to form a mainstay in the UK gaming community, with tournaments and events providing incentive to get newcomers involved. With Insomnia seemingly going from strength to strength, now is the time to truly commit. If GAME succeeds, the UK esports industry in its entirety will be better off for it. If they fail, and suffer the same fate that befell video store Blockbuster in a new age that they failed to adapt to, it could be game over.

-

[thevaluehunter] 01/12/2017 00:54

Yep silly valuation at present. I'm not selling these for a while.

[hatfullofsky] 30/11/2017 23:50

Full value (for me) in the situation they are in is :

~£70m in Cash
eFY18 PBT 10m (Stockopedia)
10m x 15 (metric of PBT to MCAP, thank you Mr Burns) = 150m

Target MCAP = 150m + 70m = 220m
Current MCAP = 94m @ 55p

120p - 130p post next trading update, then I'll take some profits.

[nikki40] 30/11/2017 10:15

Some volatility...

[nikki40] 30/11/2017 09:20

This is secerly under valued