G5 Entertainment‘s latest title Virtual City 2 has been released for more than a week now on the iPhone and iPad. Tuesday last week, the company released it also for Android in general and the Kindle Fire in particular.
We can note that VC2 is holding up well in most of the big international markets for iPad, while losing some steam on the iPhone platform. Nevertheless, the rankings in countries like China, Germany and France are very very good and in these markets there is some real money to be earned. Also, iPad top grossing rankings of around 100 in Japan and around 200 in the USA and UK are not too shabby either.
We can also note that the overall performance of G5’s Android games has improved during the last week (we are screening the Google Play markets of USA, UK, Sweden, Spain, the Netherlands, Japan, Germany, France and Canada) and we would guess that those numbers were supported at least partially by the launch of Virtual City 2:
On April 3rd, G5 Entertainment upgraded its forecast for Q1 2012, revising the revenue guidance by 8% to SEK 17.2m and the EBIT guidance by 12% to SEK 5.6m. Looking at the most recent top grossing app rankings, we know that Q2 was off to a good start as well and it was not really surprising to see last week that G5 Entertainment’s CFO Sergey Shults has increased its holding.
With all that positive newsflow, we cannot help being puzzled by the current valuation of the company. Closing at SEK 38.9 yesterday, the stock trades at a PE-ratio of 12x 2012 expected earnings of SEK 3.2. If anything, those SEK 3.2 seem more and more conservative when looking at the company’s performance after soon 4 months of the year. It is hard to know sometimes what drives a share and what investors are waiting for. What we do know, however, is that markets are not perfect and those who do their homework will be rewarded in the long-run. The next pop in G5 Entertainment’s share price will come and today’s valuation offers great value for long-term investors.
I am long G5 Entertainment and you should be too!