Why are iCandy (ASX:ICI) shares on investors’ radar today?

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Why are iCandy (ASX:ICI) shares on investors’ radar today?

iCandy, Lemon Sky Studios, Profit After Tax, acquisition, video games, metaverse concept
Image source: © Jirsak | Megapixl.com

Highlights

  • iCandy will soon be acquiring Lemon Sky Studios that has recorded stronger than expected revenue of AU$15.5 million.
  • Lemon Sky will start 2022 with a robust cash balance of AU$6.1 million, iCandy reveals.

The ASX-listed Australian company engaged in developing and publishing mobile games, iCandy Interactive Limited (ASX:ICI), shared that Lemon Sky Studios, the firm iCandy is going to acquire, has clocked a ‘higher-than-expected’ revenue of AU$15.5 million for its financial year ending 31 December 2021 (FY2021).

As per iCandy, this strong revenue growth is mainly due to a robust demand for Lemon Sky Studios' high-quality game art and animation services from its blue-chip global clientele.  

Lemon Sky Animation Sdn Bhd (Lemon Sky Studios) has recorded unaudited revenue of AU$15.5 million for FY2021, indicating an increase of 21% as compared to the forecast presented by Lemon Sky Studios during the due diligence stage.  

Meanwhile, ICI announcement revealed:

  • Most of Lemon Sky Studios' costs are fixed costs and overheads. Thus, much of the revenue growth is anticipated to translate into a strong Profit After Tax (PAT) of roughly AU$2.7 million in FY2021.
  • Lemon Sky Studios has also closed the financial year much stronger against the expected balance sheet, recording a cash balance of AU$6.1 million as of 31 December 2021.

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About Lemon Sky Studios: 

Lemon Sky Studios provides custom art outsourcing solutions for video games and animation in Southeast Asia. It is to be noted that iCandy shareholders approved the acquisition of Lemon Sky Studios at a general meeting held on 13 January 2022. According to today's announcement, the acquisition is expected to complete within the next two weeks. 

Ahead of completion, both the entities have started working closely to develop a game plan for FY2022, which includes building an extensive pipeline of games for the metaverse concept in AAA-quality format.  

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At around 1:54 PM AEDT, ICI was spotted trading 3.704% lower at AU$0.130 per share on the ASX. 

Road ahead:

On 14 January this year, iCandy signed a binding term sheet to buy 60% shareholding in Gameconomy for AU$497,297. Gameconomy is a company that provides gaming backend technology tools. The acquisition of Gameconomy and Lemonsky Studios will augment iCandy's software engineering and technology capabilities to develop extensive game titles for the metaverse. 

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