in Mobile Gaming

#G5 Entertainment: Sanity check

Food for thought:

G5sanitycheckJanuary2013

 

As you can see in the graph above, the G5 share is trading at roughly the same levels as one year ago. That is despite the fact that the company has grown revenues by more than 70% and EPS by around 55% (according to preliminary FY 2012 figures). This means that the implied valuation has come down significantly compared to one year ago. The G5 share is currently trading at around 17x 12m trailing earnings and at around 10x 12m forward-looking earnings, if we assume revenue growth in-line with management goals.  One year ago, the figures were 26x and 14x respectively. Applyng the same multiples from one year ago to today, a reasonable share price would be SEK 63 – 70.

We expect this gap to be closed, sooner rather than later as a first move in what will likely be a significant revaluation during 2013. We see the recently announced relisting to Nasdaq OMX as a major share price driver if the company continues to deliver on its goals.

Nordic Investor

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