Analysen zu JoWooD

Analyse der Euro Invest Bank vom 27.04.2007: BUY
Buy, Kursziel 3,06 Euro Die Euro Invest Bank AG veröffentlichte Ende April eine aktuelle Analyse zu JoWooD, in der sie zur Empfehlung "Buy" mit Kursziel 3,06 Euro gelangte. Nachfolgend der Wortlaut des Overviews und Financial Summaries der Analyse im Detail: Segment-specific brand focus on casual titles and core brands. JoWooD defined a clear and reasonable brand development in order to serve the most essential classes of customers. The market for casual titles experienced significant growth over the last 4-5 years and encouraged JoWooD to launch a new product line, specifically catered to casual gamers’ needs and demands. Titles for the casual line are being published and marketed on a separated brand in order to avoid brand distorting effects on the JoWooD core-brand. • Next-Gen console potential for the strongest brands of the JoWooD Group. According to JoWooD management, concepts of conversions of the group’s core brands to Next-Gen platforms are currently being evaluated. • A milestone in JoWooD’s history has been accomplished. With the acquisition of DreamCatcher Interactive Inc., a player in the North American market has been acquired. • Stabilised international distribution network and established position in the North American market. After several attempts to gain access to the North American market, JoWooD finally succeeded with the acquisition of DreamCatcher, a well established player in the North American market with a successful track-record. • Entrenching a technological core competency with subsidiary Quantic Lab. With Quantic Lab becoming a certified Testing Lab for Nintendo DS, a technological asset has been created. • Significant leverage effects on the margin structure. DreamCatcher will assist to boost top-line growth, as well as bottom-line revenues. We expect significant sales growth in the coming years due to the consolidation of the two companies and an overall improvement of the margin structure in the North American market due to the implementation of distribution contracts instead of licence-based deals. • Further optimisation of the overall cost structure. DreamCatcher is currently in the process of optimising its cost structure similar to the optimisation model utilised for JoWooD’s restructuring. Financiual Year 2007 forecast: In order to estimate revenues for 2007 for the consolidated company (hence, the JoWooD Group), we take a closer look at this year’s planned release schedule. According to JoWooD management, the Painkiller-brand sold a total of 500.000 copies in North America only, Dungeon Lords sold approximately 170.000, and Agatha Christie sold 150.000 units. It is important to mention that two of the most successful brands of DreamCatcher’s portfolio (“Painkiller” 1.5, Agatha Christie) will have a sequel coming up in 2007. Furthermore, another successful brand of the mid-90s will be released this year: Sam & Max, a classic and very humorous adventure where Lucas Arts published the first part. Apart from these strong brands, JoWooD scheduled addons for its core brands of 2006, i.e. The Guild and SpellForce 2. In 2006, DreamCatcher (stand-alone) earned revenues of approx. TEUR 12.000 based on Canadian - GAAP. Fiscal year ends on 31st of December. Based on the strong performance of 2006, and furthermore based on the line-up for 2007, we expect a group-revenue of TEUR 27.000 based on our analyst model. We strongly believe that the sequels of successful brands will be the driving force of 2007’s growth. Furthermore, we believe that the restructuring model of JoWooD will have the same impact on DreamCatcher’s performance, but nonetheless we expect the EBIT-margin to slightly decrease on the group level to around 13%, slightly below our estimated standalone margin of JoWooD for FY 2006, resulting in a group-wide EBIT of TEUR 3.510. This decrease is our estimation and is based on historical M&A-data, where the margins generally tend to slightly decrease, because of the ongoing integration. For FY 2007, we estimate depreciations of TEUR 600. DreamCatcher also rents its office, and does not operate any development studios itself, resulting in assumed depreciations of TEUR 200 for DreamCatcher. We think that there are not going to be major changes to the property and equipment composition on JoWooD’s behalf, thereby assuming the same level of depreciation as in FY 2006 amounting to TEUR 200. The remaining TEUR 200 refers to possible amortisation/impairment of goodwill that the JoWooD group could undertake after the integration of DreamCatcher has been accomplished. The estimated group-wide EBITDA amounts to TEUR 4.110. Because of still ongoing payments into the restructuring of the company, the EBIT (before restructuring) is the central figure in order to illustrate the appropriate picture of the sustainable development of the company’s financial structure. This is also the reason why our multiples are based on the EBIT per share figures, and not on Earnings per share. Again, Midway and Infogrames are being excluded from the calculation because of their current business situation and the hence resulting bias. The peer group average price/sales ratio amounts to 3.15, with JoWooD significantly underlying. Again, the peer group median has been calculated, amounting to 2.93, bringing forth a multiple for JoWooD of 3.04. The target price by utilising the multiple along with estimated sales for FY 2007 and the current outstanding shares, the target price for JoWooD amounts to EUR 3,04 (since outstanding shares and sales are approx. 27 m). By considering the risk of the publishing business, we assume a 10% risk-related discount on the target price based on our multiple calculation. By taking the average of these two, we come to an effective target price of EUR 3,06 for the JoWooD share in 2007.