How has Immotion Group performed after launching its Home-Based Entertainment product in October 2020?

Summary

• Immotion Group Plc had reported revenue growth of 87% in November 2020 compared to September 2020.
• Total LEO sales was around 11,000 units with a value exceeding £800,000 as of 22 December 2020.
• The Company had a cash balance of £1.9 million as of 21 December 2020.
• The Company had increased its operations to 25 Partner sites and 5 ImmotionVR sites as of 05 November 2020.

 

Immotion Group Plc (LON:IMMO) is the LSE listed entertainment company. Based on 1-year performance, shares of IMMO have generated a return of about negative 36.22%. Shares of IMMO were up by close to 4.04% from the last closing price (as on 24 December 2020, before the market close at 08:45 AM GMT).

Immotion Group Plc is the FTSE AIM All-Share listed Company, the UK-based immersive entertainment group that develops virtual reality cinema and virtual reality game platforms. The Company is headquartered in Manchester. Some of the vital partner sites are located as shown below -

(Source: Company presentation)

Virtual Reality Market Overview

The virtual reality market in the consumer sector includes gaming and entertainment applications, and it is holding a prominent presence due to the increasing penetration of VR in the gaming industry. The high-end technology with the use of Virtual Reality in the Entertainment industry takes a viewer into an all-new virtual world, and it is expected to grow at a rapid rate. This industry is dominated by well-established players such as HTC, Microsoft, Samsung, Sony and Google, to name a few.

Pre-Close Trading Update (as on 23 December 2020)

• The Company had started achieving resilient financial performance since the launch of Let’s Explore Oceans (“LEO”) in October 2020.
• The revenue of the Company had delivered a growth of 21% and 87%, respectively in October and November 2020, compared with September 2020. The revenue was £369,000 for October 2020 and £573,000 for November 2020.
• The Company had reported total sales of its Home-Based Entertainment product, LEO to be around 11,000 units with a value exceeding £800,000 as of 22 December 2020 since its launch.
• The LEO is entirely manufactured in China, and the Company is keen on expanding the reach of this product by penetrating multiple geographies.
• The Location-based Entertainment continues to be hit by Covid-19 pandemic as operations in the UK are closed again amid government-imposed restrictions and lockdowns.
• The operations across Melbourne and Sydney are open and all set to capitalize busy trading session during summer.
• The Company had a cash balance of £1.9 million as of 21 December 2020.

Operational Highlights (as on 19 November 2020)

(Source: Company update)

• The Company had increased its operations to 25 Partner sites and 5 ImmotionVR sites as of 05 November 2020 compared with 23 Partner sites and 5 ImmotionVR sites as of 05 November 2020. The two additional partner sites are The Maritime Aquarium at Norwalk located in Connecticut and a new installation at Sea Life Dallas.
• The ImmotionVR had shown resilient performance in October 2020 driven largely by the half-term school holidays.

Recent News

On 19 November 2020, the Company updated that it had raised gross proceeds of £1.2 million due to stronger investor demand. The fundraising shares represented around 7.3% of the total Company’s issued share capital, and the gross proceeds will be used in launching a new product by February 2020.

On 13 October 2020, the Company had updated regarding the extension of its contract for its 'Undersea Explorer Virtual Reality Theater' from 18 months to a period of 30 months with Mandalay Bay Resort and Casino located in Las Vegas. The contract had been extended till February 2023.

Financial Highlights (for H1 FY20 ended on 30 June 2020 as on 30 September 2020)

(Source: Company result)

• The revenue of the Company had declined to £0.8 million during H1 FY20, while it was £1.3 million for H1 FY19.
• The operating loss of the Company had witnessed a slight increase to negative £2.53 million during H1 FY20 from negative £2.50 million during H1 FY19.
• Most of the sites became operational in July 2020.
• The Company had opened three new sites, including Mandalay Bay during H1 FY20.
• The Company had taken the benefit of Coronavirus Job Retention Scheme and received US$161,000 under the Paycheck Protection Program and US$150,000 through the Economic Injury Disaster loan regime from the USA Government.
• The Company had a net cash balance of £1.2 million as of 25 September 2020.

Share Price Performance Analysis of Immotion Group Plc

(Source: EODHD/Others, chart created by Kalkine Group)

Shares of Immotion Group Plc were trading at GBX 4.21 and were up by close to 4.04% against the previous closing price as on 24 December 2020, (before the market close at 08:45 AM GMT). IMMO’s 52-week High and Low were GBX 8.81 and GBX 1.25, respectively. Immotion Group Plc had a market capitalization of around £16.59 million.

Business Outlook

The Company highlighted that FY20 had been a challenging year for the Company due to an adverse impact of Covid-19 pandemic. The revenue across LBE business segment did not materialize at all, However, the Company had underpinned high hopes that its business would reach normal levels once Covid-19 vaccine is rolled out in the market. The Company had reduced its cost levels of LBE segment and took advantage of furloughed support provided by the USA Government. The sales during the first half of 2021 have been pretty encouraging so far, and it is seeking an expansion in the USA in 2021 by penetrating new geographic territories.

The Company is highly confident about its new launch of Home-Based Entertainment product, LEO (Let’s Explore Oceans) done during October 2020 as it had generated total 11,000 units of sales worth around £800,000. The Company has successfully raised £1.2 million, allowing it to target a launch of the product in the USA in the second half of February 2021. The Company is continuing to witness a healthy level of enquiries regarding possible new installations after the first quarter of the next financial year and has several ongoing active dialogues.