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£1 per share sales price (£294m) translates to the business needing to get to £23m of EBITDA, based on a 12x multiple, and assuming that cash in bank grows to £20m. (i.e. DF/CF enterprise value of £274m). If FY23 posts EBITDA of £10m, and growth continues at 25% per annum compound, then the £1 valuation is four years from now.... which feels too far out to wait before embarking on a progressive dividend policy.
Investing some cash in improving our ability to deliver for more customers, and shorter time periods, is sensible, but we should be striving to minimize the "Book to bill" time as a matter of business as usual. The value of bringing on-line recurring revenues soonest is often overlooked. (There are 78 recurring months in a year: Slip a project by 2 months, and you loose 23/78ths of this years income). Our games won't remain leading edge forever, and therefore broadening and speeding up the delivery capability would appear to be a no-brainer.
My point regarding the dividend, is that generally incoming buyers attribute a higher multiple when acquiring a growth engine, but as the years tick by, maintaining 20 - 35% EBITDA will get ever more difficult.
When growth slows to less than 10% then it ceases to be a growth stock, and therefore there needs to be a pathway to replace the value of the growth, with an income stream. In fact, whether or not a buyer emerges matters not; - ask yourself why are we happy to stay invested? - because of the current growth rates being posted, and this translating into a steadily rising share price. But, in very general terms, by the time that the growth slows to a single-digit percentage, the SP will level out, and the dividend needs to be 5%+, - otherwise, why invest?.
A 1p dividend in FY 23 would represent approximately a 3% yield, which could plausibly tick up to 5% over the next 3 - 4 years. The business will still get to its £300m valuation, but in the meantime, some of the cash in bank will have been returned to the current patient investors.
I guess my point is that the Enterprise commands a valuation based on a multiple of EBITDA. - Somewhere between 8 - 15 depending on sector , and growth rates etc.
The multiple paid when acquiring cash in the bank is 1!
Also been here since 2017, traded in and out to bank some profit but mostly sitting on 350,000 shares at an average price of around 20p. I agree with your view of the business track record and growth but I don't think a divi is the best thing for us just yet.
My theory, completely made up based on what I would do if I was running the company, is that they will continue to grow to a value of around £1 per share before selling. The revenue growth is impressive, and the future looks good but they do struggle with integrations. From when they sign a deal to when the games go live on a website and start making revenue is still way too long. And they don't seem to be able to work on too many integrations at the same time. As America continues to legalize online gaming and the board signs more and more deals getting our games in front of more players in more jurisdictions this is going to continue to be a bottleneck for us. I think now is the time for grabbing market share by investing in their own capabilities. A divi would obviously help get us to that £1 target but I think there is still some more juice to be squeezed before they make that call.
It is a lot of cash to be sitting on though so who knows. Just my opinion anyway.
Been in this share since 2017... and have traded the ups and downs to now have a free ride on 150,000 shares.
I agree that it is time to start making distributions please, within a declared progressive dividend policy.
There is Cash in Bank, and the business model is ideal for making the initial move now.
The business is Capital light.
Growth is organic, rather than risking our cash on acquisitions.
It also has predictable, and growing recurring revenues and earnings, and with expansion all the while with new games and new territories in the pipeline.
GMR has an excellent 5 year track record of growth in the 20 - 40% per annum - every year - and due to the recuring nature of our income FY24 numbers can already be reasonably relied upon, - moreso than were we making widgets.
With no extraordinary expenditure on the horizon, and continued delivery of the known new business, the cash balance in 12 months time should be in the region of a further £5m on top of the £7.5m in the bank at the end of FY23 (as per the TU).
Each penny of dividend distributed costs c£3m, and therefore to embark on a progressive policy starting with 1p for FY 23 seems both affordable, and necessary to maintain the interests of Long Term holders - particularly as the growth rates will inevitably start to slow down.
At the very least, a bit more insight and colour from the BoD, as to whether the intention is to progress to becoming an income stock, or start to grow further by acquisitions would be useful.
Fully agree nashwan - I posted re this on the 12th of Jan. As I said even a token would do but with £7 Mill in cash there's no reason really why it can't be done.
To get this SP moving
Would be nice to see a dividend declared with the finals in April.
Bought another £3k - bargain imv.
I think if you look back on the H1 interims the expectations were set slightly higher if taking the percentage improvements to revenue etc on face value for that period
The smart money will arrive, once people understand these "Cloud Capitalists" are rockin'it.
Muted response from market = hopefully usa open will lift sp here.
.... Stella performance 👍
ROCE turnaround from -26% (2018) to + 21% (2022) and rising. These guy's are on it...!
Stunning growth - so sp should rise around 10% imv because it rose into these results - we shall see.
.... Exciting ...
Always good to have a Friday tune ..... "Another Dimension" https://www.youtube.com/watch?v=qORYO0atB6g 🚀 ⚡⚡🤖
As much as I like it jumping up pre update it does leave a rather bitter taste.
Hope so this has been in my bottom drawer for a very long time!
A 1.3 million purchase. Hopefully a positive indicator for a Monday announcement
Not long now I hope 🤞
Last year's update was the 1st of Feb.
Nothing?
Are they still goin ?
The growth of both is pretty impressive. From Dec '19 to Dec 21 we doubled our Revenue and by Dec 22 we had almost trebled Dec '19. Profits doubled between '21 and '22.
This is a cash generative company and I see no reason for '23 not to be comparable. A maiden dividend is always good news!
I've said before that a Divi, even a token one, would open us up to both II's and PI's who only invest in dividend paying companies. A third year of profits could well be the deciding factor and a Divi would clearly demonstrate the BoD's confidence
I think we’ll blow through 40p once this highly profitable, cashed up business starts paying dividends.
When oh when are we going to smash 40p?
We were flying in September...
Offering a new line of business that may change the future eps numbers is not share price sensitive news, so we don't need to be told by RNS about the launch of a new game.
If it is a new money spinner, we will be told (or the broker will update the forecasts on new guidance), possibly when there is evidence that it is, not in advance that it might be.
Blimey does this company still exist
Lol no coms
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