Widely anticipated, G5 Entertainment this morning released its update statement following Q4 2011. There were few surprises as the company managed to continuously deliver high growth in both revenue and earnings once again delivered on its ambitious guidance of revenues of SEK 47m and an EPS of SEK 1.90 for FY 2011. We think this is particularly encouraging as it increases the likelihood that the company will also deliver on its already communicated 2012 targets of revenues of SEK 87m and an EPS of SEK 3.20. This makes the share look extremely cheap at a current share price of around SEK 22. In order to unleash the full value of the company, we believe that G5, sooner rather than later, has to change its listing from the niche-marketplace “Aktietorget” to the OMX Small Cap list. This would add further credibility to the case and would allow the share at more reasonable multiples. Alternatively, we continue to believe that at the current valuation a takeover from a larger competitor can not be excluded.
Here is the press release:
“With the start of the holiday period, the group’s daily sales grew 70% from pre-holiday average in December 2011. The increased level of daily sales continued into January 2012.
Vlad Suglobov, CEO, comments: “We benefited from these holidays as the increased number of users unpacked their new smartphones and tablets, and went into the digital stores to purchase content for their new exciting gadgets. With the portfolio of over 100 games on iOS, Android, and Kindle Fire, G5 offers a great choice of family-friendly entertainment that equally appeals to people of all ages. G5 has been growing rapidly in 2011, and the management is focused on continuing the group’s high pace of growth into 2012.”
The total number of G5 game downloads on iOS and Android surpassed 33 million as monthly download numbers continued to grow in December 2011.
For the period of January-December 2011, the management confirms previously communicated forecast of 47 MKr revenue, 16.5 MKr operating result and earnings per share of 1.9 Kr. This corresponds to achieving 106% revenue growth and 88% operating result growth compared to the same period of 2010.
The group’s interim report for the period January-December 2011 is going to be released on 24th February 2012.”