In the final game release of 2012 (Apple closes its app store for new games until December 28), G5 Entertainment yesterday launched “Green Jelly” for iPhone and iPad. Green Jelly is a physics puzzler which at times reminds of “Jumpster“. Unlike Jumpster (which is free-to-play), however, Green Jelly is an unlockable game, i.e. people pay an upfront fee and get access to the full game. Given Jumpster’s failure to monetize on its great rankings among the top free charts (amongst others, Jumpster was top 3 in the USA), it will be interesting to see how Green Jelly will fare. We can note that other physics puzzlers like Rovio’s Angry Birds and Bad Piggies are in the unlockable format and extremely successful.
You can download Green Jelly here: Green Jelly – G5 Entertainment
Also, do not forget to nominate it for the bestappever-awards 2012:
Nominate Green Jelly HD for Most Addictive Game Nominate Green Jelly HD for Best Puzzle Game Nominate Green Jelly HD for Best Casual Game
Regarding G5 Entertainment’s share price development, we are excited about going into the most important time of the year for app developers.
2012 has been a success for G5 Entertainment and we are thrilled about their prospects going into 2013. With a proven strategy and clear targets, we look forward to follow our top-pick also in the future. Given the steady growth of the app market and the massive expansion of G5 Entertainment’s gaming portfolio, we believe the company is well set to achieve its revenue target of SEK 300m and an EBIT of SEK 100m in “a couple of years”. Assuming 90% growth p.a. (in-line with recent history) in combination with an assumed 30% EBIT margin, G5 could be able to realize an EPS of SEK 5.21 in 2013. To further illustrate the earnings potential of G5, have a look at the following sensitivity analysis:
We also continue to argue that a company that grows at the pace that G5 is doing and with such a profitability level should be trading at at least 15-20x 12-months forward looking earnings. This would imply a reasonable share price of SEK 75 – 100 based on expected 2013 earnings. As you can see in the graph above, applying a PE-ratio of 15x on the expected EPS level of SEK 5.21 implies a fair share price of SEK 78. At a PE-ratio of 20x, the share price would be >SEK 100.