Keywords Studios (KWS): Looking like a winner a...
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Edison Investment Research Limited
London, UK, 2 March 2021
Keywords Studios (KWS): Looking like a winner as the dust settles Buoyed by exceptional demand for games during lockdown and boosted by the start of the console transition, the global games industry showed year-on-year growth of 20% in FY20 (Newzoo). Benefiting from increased industry development spending and the growth in new releases, Keywords delivered underlying organic revenue growth of 12%, with FY20 revenues rising 14% y-o-y. Assuming no worsening impact from COVID-19, FY21 looks set to be a more settled year. With publishers launching increasing numbers of new titles to address a growing next-gen console base in FY21-23, demand for Keywords' services should continue to build in the short to medium term. The outlook for Keywords appears positive and, with net cash of c €100m (plus €100m of undrawn facilities), Keywords remains well placed to participate in earnings-enhancing M&A.
Keywords' shares trade on an FY21e P/E of 38.9x, falling to 34.5x in FY22e, in line with its UK games industry peers. Although this is a demanding valuation, we expect the recent next-gen console launches to lead to a period of heightened game releases, benefiting underlying demand in the period FY21-23e. When complemented by Keywords' proven accretive buy-and-build strategy, this should further reduce valuation multiples. Click here to view the full report or here to sign up to receive research as it is published.
All reports published by Edison are available to download free of charge from its website About Edison: Edison is a leading research and investor relations consultancy, connecting listed companies to the widest pool of global investors. By focusing on the volume and quality of investors reached - across institutions, family offices, wealth managers and retail investors - Edison can create and gauge intent to purchase, even in the darkest pools of capital, and then make introductions via non-deal roadshows, events or virtual meetings. Having been the first in-market 17 years ago, Edison now has more than 100 analysts covering every economic sector. Headquartered in London, Edison also has offices in New York, Frankfurt, Amsterdam and Tel Aviv and a presence in Athens, Johannesburg and Sydney. Edison is authorised and regulated by the Financial Conduct Authority. Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities. For more information, please contact Edison: Richard Williamson +44 (0)20 3077 5700 tech@edisongroup.com Dan Ridsdale +44 (0)20 3077 5729 tech@edisongroup.com Learn more at www.edisongroup.com and connect with Edison on: LinkedIn https://www.linkedin.com/company/edison-group-/ Twitter www.twitter.com/Edison_Inv_Res YouTube www.youtube.com/edisonitv
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1172241 02-March-2021
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