A look at Gaming players on the ASX- JIN, ALL, EM1

  • February 27, 2020 12:27 AM AEDT
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A look at Gaming players on the ASX- JIN, ALL, EM1

Amidst today’s hectic schedule of everyday life, gaming is proven to be one of the best activities to unwind and relieve stress. Playing games have inspired all sections of the society and leaves a footprint in workplace, home and school.

Digital Australia 2020: The power of games, a report released by Interactive Games & Entertainment Association, Australia, mentions that more than two-thirds of Australians play video games and, interestingly, almost half of the video game players are female. Other than a source of entertainment, playing is also a means to learn and connect. Mentioned below are some of the key highlights / figures from the report.

  • 21 percent of households have a virtual reality headset
  • 65 percent of the sample population use consoles to play games
  • Average age of video game players is found to be 34 years

This study considered the responses of 1,210 Australian households and 3,228 individuals of all ages.

The findings of this study justify the increasing pace of growth of the gaming industry in Australia. For 2013 – 2018, the sale of video games in Australia grew at a CAGR of 15 percent. Outlook for this industry:

  • Forbes in Nov. 2019 mentions that the video game industry holds an immense potential to reach ~ $300 billion by 2025.
  • As per a market report, the global gaming industry is likely to deliver a CAGR of 12 percent from 2020- 2025.

Interesting Read: Is Australian Gaming A Defensive Sector?

Let’s have a look at diverse gaming options, including lotteries, video games / e-sports, casinos, electronic machines etc. We will also be looking at a few companies operating in this sub-sector and discuss their financial and stock performances.

Stock Performance of 3 ASX-listed gaming players:

As on 26 February 2020, the stocks of JIN, ALL and EM1 last traded at $10.950 (down 9.129 percent), $35.020 (down of 2.695 percent) and 0.008 (no change as compared to previous closing price) respectively.

JIN’s Lotto platform showcased a phenomenal experience

Jumbo Interactive Ltd (ASX: JIN) is a digital retailer of two types of lotteries, namely charity as well as national jackpot lotteries.

JIN continues to build momentum in charity lottery segment:

On 25 February 2020, JIN signed a new SaaS licence agreement with MS Queensland (Australia’s charity lottery operator) for a five-year period, which may extend to 10 years subject to the fulfilling of performance criteria. Under the agreement, MS Queensland would operate a personalised version of Jumbo’s lottery platform to administer its entire lottery sales.

JIN’s Founder and CEO, Mr Mike Veverka mentioned that MS Queensland is the 4th charity lottery operator in Australia that has selected Jumbo in 15 months.

JIN’s Skyrocketing financials:

Recently, the company released its half yearly results for 2020 for the period ended 31 December 2019. The company announced a fully franked dividend of 18.5 cents per share which is an an increase of 23 percent on prior corresponding period (pcp). Record date for shareholders is 6 March 2020 and the dividend will be paid on 20 March 2020.

The snippet of the performance is as mentioned below.

  • Total Transaction Value of $185.3 million, an increase of 25.3 percent on pcp.
  • Revenue from continuing operations grew by 23.1 percent on pcp, from $30.5 million in 1HFY19 to $37.6 million in 1HFY20.
  • Net profit after tax was $14.4 million, an increase of 13.38 percent on pcp.
  • Number of active customers grew by 118 percent over last 2 years, to reach the figure 848,621 at the end of 1H FY20.
  • Capital expenditure was $3.3 million during the period, an improvement of 32% on pcp.
  • Cash and cash equivalent as on 31 December 2019 stood at $71.2 million.

Forecasted Outlook:

  • For FY2020, the CapEx is projected to lie in between the range of $6.5 - $7 million, reason being the expansion of SaaS business.
  • By FY2022, the total transaction value at Jumbo platform is expected to be $1 billion. This includes the SaaS business and ticket reseller business.
    • Estimated $680 million in revenues from Ticket reseller business is possible with a growth rate of 24.7 percent per annum (historical 5-year CAGR) over 3 years
    • Rest $320 million needs to be generated from the SaaS business which presently has $135 million under various contracts.
    • Also, JIN intends to win new SaaS deals of $100 million every year.

ALL offers a diversified portfolio of games

With a motive to create happiness in life by leveraging the power of play, Aristocrat Leisure Limited (ASX: ALL) provides games on land -based and online platforms comprising of casino management systems and electronic gaming machines. Aristocrat has licences to nearly 300 gaming jurisdictions in the world and has operations in excess of 90 countries.

Also Read: Aristocrat Leisure Limited

Significant performance with 22.6 percent rise in NPATA:

ALL released its FY 2019 Annual Report for the period ended 30 September 2019. The total dividend for the year was 56 cps which was 100 percent franked, signifying an increase of 21.7 percent on pcp. Mentioned below are the key highlights.

  • Revenue was up by 22.7 percent pcp, from $3,583.8 million in FY18 to $4,397.4 million in FY19
  • EBITDA for the period was $1,596.8 million, an increase of 20.2 percent on pcp.
  • NPAT increased by 22 percent on pcp, from $616.9 million in FY18 to $752.8 million in FY19.

The steady growth of the company is led by various attributes such as full-period gain from Digital acquisitions, robust organic growth across both Digital and Land-based operations and taxation and currency benefits.

EM1 delivering ArcadeX platform

Emerge Gaming Limited (ASX: EM1) is an operator of casual gaming tournaments and online eSports platforms. EM1 own eSports tournament platform, ArcadeX which was founded in December 2016. ArcadeX comprises of “ArcadeX eSports” for PCs / consoles and “ArcadeX Mobi” for mobile phone devices. The company has successfully held more than 10,000 online tournaments.

Geographical expansion of ArcadeX:

The company announced the launch of ArcadeX in South Africa with integrations into WorldPlay, Samsson and Mondia Media.

WorldPlay is a content distributor and direct carrier billing aggregator, which would help ArcadeX to be launched in 3 out of the 4 major Mobile Network Operators (MNO) in South Africa. As an outcome, ArcadeX expands its potential access to approximately 88 million subscribers of the major MNOs in South Africa.

Tiburon Media Group was appointed to launch ArcadeX related digital marketing campaign in South Africa. On 13 January 2020, a marketing agreement was signed with Kagiso Media Pty Ltd to market the product in South Africa.

The company estimates that ArcadeX in South Africa would generate its first revenues by the end of Q3 FY2020.

Also, the company released its quarterly results for the period ended 31 December 2019, wherein the cash and cash equivalents at the end of the quarter end were $2.484 million, as compared to $2.822 million at the end of the prior quarter.

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