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Hahaha yes I guess a bit of a generic phrase however for its valuation as you say when in terms of revenue and bottom line it is rather the epitome of this saying.
I appreciate your input (and patience) as I have never posted on forums before.
Would you know of any competitors of Keywords that I can further research or any other useful areas to look into?
As of now from a value investor standpoint it seems like a sell or at least reduce my holding.
Thanks again :)
"A great company, but undoubtedly overvalued" - reading these forums, you comer across phrases like this a lot, and do they really mean anything? I'm not picking holes in your post Ellis7, for me "value" like beauty is in the eye of the beholder. Intrinsically, you are correct - a valuation of £2.06bn about a company with a turnover of £350-400 million is a bit bonkers. Profits after tax for the last 5 years - in total - are only £45 million. But this is, in my view, a gambling opportunity - if it can find a game worth a £1bn amongst its stable of developers, then the SP will seem cheap.
Hi,
I bought into this stock 3 years ago from a friend's tip (I knew nothing about investing at this point and of course I shouldn't have done this). Luckily however, unlike other investments this one has turned into a machine. I am now restructuring my portfolio to my stricter criteria and in the process Keywords has given me a challenge.
Despite my scepticism. I love the financial management of this company and their clear objective. Over the 3 years it has grown from a largely localization company to one that is on its way to being the go-to video game service provider according to management. Debt remains low, and revenues are growing organically too. From a value investor standpoint however though perhaps this is the end of the road for me.
A great company, but undoubtably overvalued - whether this is rightly so is what I am here to ask. It brings me to the quesiton is there anyone else in this sector with the same objective as Keywords? Who are their competition? Are they on their way to monopolising the video game service sector?
Thank you in advance to anyone willing to have a discussion or answer my question.
KWS is roaring away.
Just under 2 years ago the SP dropped to under 1000, and though there was a brief reprise during the summer of 2019, the SP sank to a low of 1043 on 04Nov19 - since then there's been no stopping it!
I'm a long term holder, back on 22nd March 2018 I posted on this forum that "(KWS) is one my "band of 5" companies which could potentially be in the FTSE100 in 5 years time" and right now I really do think KWS will be in the FTSE100 by March 2023.
If the numbers can be believed in the RNS this is earnings positive this year........so it looks like a good buy expanding marketing capabilities in gaming industry
It trades on a very high PE ratio and while revenue is still growing, margins are lower. In other words, this is still a great business transitioning to maturity. I expect PE ratio will fall in coming years but underlying earnings should support share price.
Not sure what's going on with the SP at the moment, as it's down about 8% from the 52-week high.
With such an interesting share why is this forum so dead ? - advice please .
Revenue in the six months to June 30 was up 13% year-on-year to EUR173.5 million from EUR153.2 million.
On an organic basis, revenue climbed 8.0%.
Pretax profit jumped 66% to EUR11.1 million from EUR6.7 million a year earlier.
The company noted "strong demand for most of our services throughout the period".
Growing revenue, growing profit, and increased demand - what more can you ask for?
I'm really starting to really appreciate what a great company this is. Up another 6% as I type. Covid-19 was easily shrugged off and there's real momentum since the recent cash raise. Yes, it is expensive; the PE ratio is through the roof. But I actually see this as a real endorsement of quality that the company can sustain share price growth even at this level.
I keep adjusting my 20% stop loss upwards. I guess it will be triggered one day but for now the trend is my friend.
The shares are extremely expensive. I would be put off. That doesn't mean, however, that the shares won't go up
Why is this forum so dead please ?
Does no one in the UK buy this share ?
My guess is, travel restrictions may slow down new acquisitions in the near future , otherwise a good RNS
price 14.50
Today's after hours RNS is very interesting. A risky time to be looking to raise funds I would have thought. It seems the reason for the placing is to go 'bargain hunting' companies which previously rejected KWS approach but may now be in a distressed state and more inclined to accept a second approach. Long term this seems a wise move; if they can get a decent placing price.
I assume the term 'book building' will mean PI are excluded from the process. We just need to hope the placing price is not too much lower than current share price. All shall be revealed by 20th May but in this market I expect choppy waters before then. Chance to top up at a lower price? Or sell for cash if you believe the placing will be at a significant discount?
Here's the Edison page https://www.edisongroup.com/company/keywords-studios/2119/
It seems silly to me to sell because one firm has suggested they're going to be less profitable for one year amidst a global pandemic. If you can't bear to see your portfolio drop then I'm not sure how you can bear to be in on any stock given market volatility, uncertainty, and how driven individual stock prices are by ETFs. If you've bought at a good price it's probably wise to not time the market.
From what they said KWS are in a great position to pick up extra work companies are unable to fulfil with a lot of their organisation able to work from home. They've got a strong balance sheet and the outlook looks good with the new consoles coming.
My concern would be if the latter are postponed (perhaps likely if there were a second wave?) but even then KWS will have work coming their way anticipation for when they are released. I wouldn't buy above £13 for now, but I don't think selling is the right option unless you're timing another drop.
Lots of bargain hunters in the market today. A lot of quality stocks to be has at a good price so I'm not surprised to see KWS doing well in this market. In the medium to longer term I'm worried that this may be a suckers rally. The economic damage done by governments over-reaction to Covid-19 has caused lasting damage and high unemployment will be with us for years to come.
I'm happy to hold KWS while this rally lasts but I'm also thinking how to adjust my portfolio for a post virus world. It's not going to be pretty and I'm not convinced the latest Playstation will be high on many peoples shopping list. KWS will probably always be part of my portfolio for many years to come but maybe some re-balancing towards more defensive stocks is called for?
I'm more interested in dividend paying shares; although VLG looks interesting.
Oogalflugal, Edison would have been "guided" in their numbers in an informal way by KWS. That's how these things work.
Lootgaloot, maybe I'll reinvest in some CAPD, MWE and/or VLG, too soon to say. I've recently added a few in SDI and RNWH, and invested in REAT - which could be a multibagger given its tiddler status. I also topped up ODX and AVCT which have since absolutely surged.
yes, still on an upward trend so I will ride the momentum. I also have a tendency to sell winners and stick with the losers; a habit I'm trying to break.
Re. Edison reports and free reports in general. They are worth every penny you paid for them.
Not too sure how reliable Edison reports are. They get paid to write them by the company. Don't know if this means if you stop paying you get a negative report. However I think quite a few long termers are realising this has been a good run and the markets do seem a bit optimistic. I know Netflix have had a great run too but are warning this may not continue when lockdown ends. Games have had a staggeringly good run on the back of Coved. I think the disruption is fairly old news and the momentum here has been pretty solid. No harm in taking a rest here although it does seem still in a slight up trend.
Do you know why Edison have reduced their forecast for 2020?
2019 was always going to be a slow year as the previous xbox and playstation consoles wind down. I expect 2020 business to benefit from the new console versions. Lots of games releases coming up so I'm confused by Edison position. Do you have a link?
COVID-19 is likely to cause some disruption in operations but also presents opportunities for acquisitions and new working practices. KWS is in my SIPP, I'm reluctant to chop and change on short term outlook. I take the long view. Having said that, I am a bit overweight on KWS (have been for a while). What are you looking to move into? I'm looking at silver ETF but I'm very reluctant to sell a good performer like KWS.
I've sold out over today and last week.
As per the latest Edison note, 40% of revenues have been disrupted due to COVID-19.
They've heavily reduced their forecasts. For this year to 31/12/20 they now estimate 41c EPS, i.e only around 35p EPS.
That's a P/E of 42....
I don't mind paying a premium for a quality business like KWS, but the risk/reward here has swung much too far. I can't see much upside here for a while to come, but I can see substantial downside if H1 trading and numbers in updates come as a surprise to the markets.
Of course long-term KWS should be great, and I will hopefully return at some point, but there are many other better opportunities out there without the risk and with more reward.
KWS was one of my larger holdings, and has been a great ride from 140p or so. Good luck to all still here.