Leading International Investment Research, Edison Investment Research

Edison Investment Research

Leading International Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

Equity Bottom-Up

Games Workshop Group PLC / Equity Bottom-Up

Games Workshop Group’s (GAW’s) FY23 trading update indicates an improvement in underlying trading in the latter months of the period and the expected easing of cost pressures. The strength of the improvement is evident in the fact that FY23 PBT is greater than both our previous FY23 and FY24 estimates. We upgrade our FY24 PBT estimates by c 4%, which incorporates an underlying upgrade offset by a new foreign exchange headwind.

Games Workshop Group’s (GAW’s) FY23 trading update indicates an improvement in underlying trading in the latter months of the period and the expected easing of cost pressures. The strength of the improvement is evident in the fact that FY23 PBT is greater than both our previous FY23 and FY24 estimates. We upgrade our FY24 PBT estimates by c 4%, which incorporates an underlying upgrade offset by a new foreign exchange headwind.

Games Workshop Group - FY23 profit ahead of previous FY24 estimates

Games Workshop Group’s (GAW’s) update highlights that Q323 trading to the end of February 2023 is in line with expectations. In addition, a further dividend of £1.20 per share has been declared, taking the year-to-date total to £4.15 per share, a very healthy current yield of 4.6%, well ahead of FY22’s £2.35 per share. Separately, this week the company announced that the tenth edition of Warhammer 40,000 will be released in the summer of 2023.

Games Workshop Group’s (GAW’s) update highlights that Q323 trading to the end of February 2023 is in line with expectations. In addition, a further dividend of £1.20 per share has been declared, taking the year-to-date total to £4.15 per share, a very healthy current yield of 4.6%, well ahead of FY22’s £2.35 per share. Separately, this week the company announced that the tenth edition of Warhammer 40,000 will be released in the summer of 2023.

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>2023 gameplan remains unchanged; we see limited upside from here for ACWI-US, and we expect a rangebound year of trading on ACWI-US with $93 capping upside and $75-77 capping downside</li>
<li>We also remain overweight Europe/UK, we want to add exposure on pullbacks to China/Hong Kong/EM, and overweight non-U.S. equities (MSCI ACWI ex-US) relative to MSCI ACWI</li>
<li>We highlight buy ideas within Technology, Communications, and Consumer Discretionary. The UK/Europe and Hong Kong/China continue to make up the majority of our buy recommendations</li>
</ul>


2023 gameplan remains unchanged; we see limited upside from here for ACWI-US, and we expect a rangebound year of trading on ACWI-US with $93 capping upside and $75-77 capping downside
We also remain overweight Europe/UK, we want to add exposure on pullbacks to China/Hong Kong/EM, and overweight non-U.S. equities (MSCI ACWI ex-US) relative to MSCI ACWI
We highlight buy ideas within Technology, Communications, and Consumer Discretionary. The UK/Europe and Hong Kong/China continue to make up the majority of our buy recommendations


Major Top on U.S. Dollar; Overweight Non-U.S. And Europe/UK; Buys in Tech, Comm., Discretionary

Games Workshop Group’s (GAW’s) record H123 results included strong revenue recovery in Retail as COVID-19 restrictions eased, foreign exchange gains, offset by some negative effects, specifically from Russia and China, and flat sales in the key North American market. The lower reported profit reflects the well-known external cost pressures and investment to support future revenue growth, partially offset by good cost control. Our profit estimates are unchanged but we increase our dividend estimate. The recent strong share price performance takes the prospective FY23e multiple (23.9x) to between its recent long-run average (17.2x) and peak multiples (over 30x).

Games Workshop Group’s (GAW’s) record H123 results included strong revenue recovery in Retail as COVID-19 restrictions eased, foreign exchange gains, offset by some negative effects, specifically from Russia and China, and flat sales in the key North American market. The lower reported profit reflects the well-known external cost pressures and investment to support future revenue growth, partially offset by good cost control. Our profit estimates are unchanged but we increase our dividend estimate. The recent strong share price performance takes the prospective FY23e multiple (23.9x) to between its recent long-run average (17.2x) and peak multiples (over 30x).

Games Workshop Group - Core revenue growth offsets licensing decline

Games Workshop’s (GAW’s) H123 trading update indicates an encouraging start to the year, with reported revenue and operating profit representing more than half of our full year estimate. With around three-quarters of revenue earned overseas, GAW is a beneficiary of sterling’s weakness, notably versus the US dollar, which alone, we estimate, contributed c 6% to GAW’s core revenue growth in H123. Although sterling has recently strengthened, at current exchange rates it continues to provide good support for the remainder of the year. We upgrade our FY23 and FY24 revenue estimates by c 2% due to favourable exchange rates, but maintain our prior profit estimates. Our discounted cash flow-based valuation of £100/share is unchanged ahead of publication of H123 results.

Games Workshop’s (GAW’s) H123 trading update indicates an encouraging start to the year, with reported revenue and operating profit representing more than half of our full year estimate. With around three-quarters of revenue earned overseas, GAW is a beneficiary of sterling’s weakness, notably versus the US dollar, which alone, we estimate, contributed c 6% to GAW’s core revenue growth in H123. Although sterling has recently strengthened, at current exchange rates it continues to provide good support for the remainder of the year. We upgrade our FY23 and FY24 revenue estimates by c 2% due to favourable exchange rates, but maintain our prior profit estimates. Our discounted cash flow-based valuation of £100/share is unchanged ahead of publication of H123 results.

Games Workshop Group - Encouraging trading in H123

United Kingdom

Games Workshop Group Plc manufactures and retails tabletop war-game systems and associated miniatures. The Company operates approximately 250 stores and serves over 350 independent retailers in the United Kingdom. Games Workshop also has stores in North America, Continental Europe and Australia.

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Games Workshop Group PLC (GAW LN)

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Games Workshop Group - Core revenue growth offsets licensing decline

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Edison Investment Research

Games Workshop Group - Encouraging trading in H123

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Edison Investment Research

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