Games Workshop Group - Rounding off a stellar year

Games Workshop’s (GAW’s) year-end trading update highlights higher revenue and a more significant increase in operating profit and licensing income, versus our expectations. FY21 has been very strong despite COVID-19 restrictions on retail, likely incremental costs due to Brexit and recent currency headwinds. Management’s new estimates for FY21 imply year-on-year growth for revenue and PBT of at least c 30% and c 68% respectively and limited underlying cost growth of c 4%. The strong performance has led to higher year-on-year rewards for staff (profit-related pay increased fivefold) and shareholders (total dividend of 235p versus 145p). We increase our forecasts for FY21 to be consistent with the new estimates and make a modest upgrade to FY22. Our DCF-based valuation increases to 12,000p.