RE: Trading statement - ahead of expectations30 Jan 2020 11:50
New note from Edison, confirming that EBITDA and PBT were ahead of forecasts.
KWS have lots of headroom for much larger acquisitions than they've made recently - a decent-sized acquisition from existing facilities would bring the rating down very nicely:
Https://www.edisongroup.com/publication/sparkling-growth-improving-margins/26052
Summary:
"Although we expected strong growth in H219, FY19 revenue of €326m, reflecting 30% overall growth and 15% organic growth, represents a sparkling performance. EBITDA and PBT were ahead of forecast at €49.5m and €41.0m, respectively. Given the higher revenue base, we are revising our FY20 revenue estimate up by 4%, but prudently holding operating profit and PBT at previous levels as margins normalise through FY20.
We retain our view that Keywords remains strongly positioned as the only games service provider at a global scale. The company’s P/E rating (25.0x FY20e) reflects its leading market position, track record and potential, and should fall further as Keywords continues its buy-and-build strategy."
"Market leader in a growth industry
As management emphasised at the Montreal capital markets day (CMD), as well as strong industry growth (Newzoo forecasts 8.4% growth 2019–22), Keywords benefits from the growth of outsourcing and increasing market share as a market leader in a fragmented global industry. Growth is further boosted by M&A through Keywords’ successful buy-and-build strategy. With the next console transition in Q420, the medium-term growth outlook remains robust and next week’s London CMD will provide further insight into the opportunities for each of Keywords’ business lines."
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