Keywords Studios - £100m placing, trading resilient

Keywords announced a £100m equity placing on 14 May 2020. The funds are to increase flexibility for the group’s buy-and-build M&A strategy and reinforce its financial position. Management also updated on trading over March and April (7% y-o-y growth), with January and February showing 21% y-o-y growth. Recognising this resilience during lockdown, we have raised our revenue growth forecast for FY20 to 8% y-o-y (4% previously), with a consequential impact on FY21e (€405.8m, 15% growth). We maintain our view that Keywords is well placed as the only games service provider on a global scale. The P/E rating (45.8x FY20e, 34.9x FY21e) reflects the company’s leading market position, track record and potential, but should fall further as Keywords executes its buy-and-build strategy.