Media and games invest(MGI) - Very brief look through

How to evaluate

Gaming companies is always hard to valuate, because a large part of the cash flow are invested in new games. Here is my take on how to valuate Media and games invest(MGI). MGI get even more complicated since MGI are acquisition intensive.

Profit

I will be look at en adjusted EBIT. An approximation for EBIT is either to adjust EBIT for PPA depreciation and amortizations or to adjust EBITDA for own work capitalized, I think that this gives the best estimate of a true EBIT.

2021

EBITDA - own work capitalized: 42.2 MEUR

EBIT + PPA D&A: 48.8 MEUR

EV at stock price of 34,3

EV is as always adjusted for debt of 383 MEUR and cash of 180 MSEK. I have not dug down into how much of additional payments for acquisitions there are for MGI put in the q4 report I found a deferred payment for KingsIsle of 165 MEUR. I will also adjust EV for this.

Adjusted EV/EBIT

  • Adjusted for PPA: 17

  • EBITDA - own capitalized work: 20