Keywords Studios Share Discussion Threads

[rivaldo] 19/10/2018 11:41

KWS have long since moved on from pure gaming - which will continue to thrive anyway for generations to come as smartphone and computer usage grows across the world, and interactive streaming of content takes off, thus sparking increased demand for that content.

KWS have already moved into the esports market, which "by 2020...is tipped to be generating £1billion annually in revenues and, like video games, there is a requirement for localisation and consistent quality"

Then there's the steady rise of augmented and virtual reality.

Plus the move also already made into music and audio services, plus translation services.

As scooper72 says, if my children and their friends are anything to go by then you ain't seen nothin' yet :o))

OT : agreed Villarich, sorry, you posted whilst I was getting my own post together.

[villarich] 19/10/2018 11:29

I agree. Games and gaming as a past time is bigger and more prevalent now than it was 5 years ago, and it's only going to get bigger.Look at Fortnite and the impact that is having bringing in casual gamers. E sports is in its infancy but will break onto the mainstream very soon. Fifa tournaments were screened on sky sports this year as a one off. Don't be surprised if it becomes a regular occurrence.

[scooper72] 19/10/2018 09:36

Are you saying there has always been a 5yr cyclical move up or that you see that things are just in a different place from 5 years ago. From what I can gather from watching my 4 teenage boys and even my 8 year old daughter. The interest in games is growing not slowing down out there in the market place. Friday nights are now spent on the PS4 as a social event between homes across the neighbourhood, rather than teenagers wandering the streets.

[phowdo] 19/10/2018 09:26

US gamers off yesterday.
ATVI -8.3%
TTWO -4%
EA -2.8%

Increasing evidence that the cyclical top is in for gamers.

Eg. the recent floats of lower tier gaming companies like SUMO,TM17 and CDM where insiders sold significant holdings at the IPOs suggests those who work in the industry are cashing in. Compare and contrast to the floats of KWS and FDEV 5 years ago where the IPOs were to raise money to grow business rather than an exit for insiders. Its been a great 5 years being long this sector but now is the time to take profits and perhaps get short.

[rivaldo] 17/10/2018 13:53

Good to see Rathbones investing in KWS:



"The pre-Christmas opportunities in the UK gaming space
Alexandra Jackson
16 October 2018

For a very long time, it has been almost impossible to invest in this exciting part of the UK economy.

But that has started to change, perhaps with a little help from HM Revenue & Customs' Video Games Tax Relief, which offers a 20% discount on development costs. A number of small and exciting British developers are now publicly listed.

We have invested in a couple of these companies....

....Another, perhaps less glamorous, investment is Keywords Studios. This developer does the mass of dirty work behind the scenes.

If you ever find yourself (or your kids) playing games and marvelling at how real the water looks, remember some people, perhaps working for Keywords Studios, spent months rendering it.

Keywords Studios also translates games into foreign languages, fine-tunes characters and develops the artwork behind cinematic trailers.

How gaming is boosting the UK stockmarket

The demand for computer games is skyrocketing worldwide. At the same time, technology has made distribution much easier than in the past; no more capital-intensive warehouses full of CDs in the age of app stores and downloads.

etc"

[rathean] 17/10/2018 11:15

Up and down like a fiddlers elbow... autobots and day traders filling their collective boots. Will we get another go at 1400 or is that W the double bottom?

[scooper72] 16/10/2018 12:24

22,320 shares bought at 1474p by someone who obviously thinks the current price is good value

[scooper72] 15/10/2018 16:54

...he also said that they got Gobo at a very decent price.

[1670127] 15/10/2018 16:49

@rivaldo. Agree and as I said you could be correct with your numbers. They may have to issue more shares for the purchases (or take on debt) which could dilute or reduce earnings but they have freeflow cash so maybe not necassary. It's much harder to grow based on acquisition as your revenues grow needed to sustain higher multiples. At 100 million you need 20 million additional revenue to get 20% growth. At 200 it is an additional 40! The following year even more so. A p/E of 19 is reasonable. We will see. If it gets sub 1000 (and I don't expect that for now) I will buy but for the time being I'm looking at other shares.

[1670127] 15/10/2018 16:40

@scooper72. I think that is certainly the case, the charts for a lot of the tech companies have the same profile at that at KWS.

[scooper72] 15/10/2018 16:05

Spoke to one of the analysts today from that report. Just tried his number and he was v generous with his time. He felt the recent drop was less about anything specific to KWS and much more to do with growth companies getting a bit of a hammering in the recent correction. He thought that the recent drop in price obviously made the shares a much more attractive buy now and that there is no change at the company and what they are doing.

[rivaldo] 15/10/2018 15:51

Fine, but in order to get a true picture of the valuation one has to take into account the likelihood of further acquisitions from already available facilities as well as simply from organic growth.

Especially as everything KWS has done to date has been so successful, with huge synergies from integration and cross-selling.

As I say, given the available cash and facilities, Edison have estimated that using "reasonable assumptions" on organic growth and acquisition multiples, KWS could exit FY19 at the 85c EPS level, i.e around 75p EPS,

That's a forward P/E of only 19 at 1440p - not very stretching at all.

[1670127] 15/10/2018 14:41

I am a private investor who works in Montreal in the games industry so have more visibility, than most, on companies in this space. I have friends who work at KWS, some happy some not! I hold 21 stocks, all of which, like KWS, I did my research (in detail) before buying. Out of all the companies in have looked at, in my view, KWS was the most over valued based on fundamentals of those in have considered investing in. I still feel that is the case. I respect the views of those people who believe differently, and they may prove to be the more accurate going forward, however after being burnt by a couple of AIM companies in the past that were overhyped felt it necessary to present my thoughts and insights. I believe KWS have a real business, but I don't believe in the valuation and I think in order for them to continue to grow organically they need to focus on more integration of those existing businesses rather than pursuing an acquisition at all cost policy. I'm not really obsessed with KWS, but do have a fascination of number and enjoy playing with them and modelling, !!! I would consider investing in them if thier stock hit my fair value level. I would suggest everyone does thier own research and make thier own opinions!

[rivaldo] 15/10/2018 13:59

KWS concluded at their interims that they expect to met expectations even before any further acquisitions - and of course there has already been one small acquisition since then with likely larger ones to follow:

"Outlook

Selectively reviewing a strong acquisition pipeline

Trading in the second half has been good and we expect to meet market expectations for the full year before the positive impact of any additional acquisitions"

1670127, your posting history is "interesting" and colours the way I read your posts. Your apparent obsession with KWS and only KWS is concerning.

[1670127] 15/10/2018 13:33

I should have added that the reduced growth levels will be reflected in FY19 results as they were completed in 2018. FY18 will show greater growth because of the large acquisitions, VMC etc, last year.

[1670127] 15/10/2018 13:26

It is an interesting article and can be read in a number of ways. The current FY19 forecast is stated as Keywords’ FY19e P/E of 37x is at a premium to peers. This is close to the 40x ratios at the height of the dot-com bubble. I'm hearing that the integration of parts is not going so well. Companies under the umbrella are competing against each other and they are struggling to provide simple things like single keyword invoices (they are putting extra people in place to handle this). With large clients like Telltale going under there is also the issue of retaining existing clients. This year they have acquired companies with a combined revenue of around 30 million dollars. This represents only 10% growth, assuming the business is all kept, plus organic. I'm not sure this justifies double the P/E ratings of peers. This could go both ways. Time will tell.

[shanklin] 15/10/2018 11:06

Includes

"Good progress with acquisitions

The integration and rationalisation of VMC has been executed ahead of schedule and H2 should see the margin benefit. In Gobo, we believe Keywords acquired a good asset, growing revenues at a strong double-digit rate at a good price. A strengthened cross-selling platform and greater scale are now enabling the company to invest in earlier-stage, IP-based business (eg Yokozuna Data or through the new Ventures operation) or acquire teams (Sound Lab). Despite this, we see no significant inflation in the average multiples paid for deals. With €75m of the €105m facility undrawn and a robustly cash-generative model, we estimate that the group has c €95m of firepower for acquisitions over the remainder of FY18 and FY19, and believe organic growth and M&A could potentially expand EPS to an 85c run rate exiting FY19, 80% above our current FY18 forecast.

[rivaldo] 15/10/2018 10:39

The valuation here must be getting interesting for newbies now.

Given the available cash and facilities, Edison have estimated that using "reasonable assumptions" on organic growth and acquisition multiples, KWS could exit FY19 at the 85c EPS level, i.e around 75p EPS, That's a forward P/E of only 19 at 1440p - not very stretching at all.

[scooper72] 14/10/2018 13:45

'Key watch level' meaning you are regarding it as a point to buy above, but to off load if it breaks below?

[togglebrush] 14/10/2018 13:27

Market correction is noted but this is at the top end of such corrections. There are possibilities that there may RNS's next week with changes in larger holdings.
'
A year ago, 24 October 2017, there was a placing at 1400 for a total of 5,357,143 new ordinary shares. That is my current key watch level.

[scooper72] 14/10/2018 12:46

Do you think that volume helps to strengthen a level of support for where we are, or does it mean little in the context of the correction across the market last week?

[togglebrush] 14/10/2018 09:31

FWIW by my reckoning
'
Friday was the maximum daily trading volume recorded this year by a large margin at 1,182,413
'
My calc gives daily Median at 188,193 and top quartile starts at 281,503
We haven’t seen volumes of this order since the placing on 25th October 2017.
Shares in issue are 63.78 million
'
All this adds to past six days trading where over 4.2 million shares have been traded or 6.5% (if each was a discrete buy or sell then 3.25% of issued shares changed hands). The share price reaction is that it is down from 1946 to 1496 or a 22% drop

[bamboo2] 12/10/2018 16:30

Quite a few KWS shares out of lock in periods over recent months.

eg Mindwalk had 513,000 [31/5/18], Volta 45,000 [29/7/18]

Player Research can sell 65,280 from 26/10/18

[bamboo2] 12/10/2018 16:21

Yep. I'm all sold now. Stopped out this afternoon just after 15:30 at 1530!

[rathean] 12/10/2018 15:17

Sold those I bought at 1405 and a few elsewhere, nice little earner in turbulent times. Prefer to keep cash on the table in case Trump, Italians, May, Chinese, Turks, Russians or my wife kicks off over the weekend :)Still holding a wedge here with 16 b/e, will hold those until circa 19.50. All imo dyor ofc.