Goodbye Kansas Group: EBITDA break-even in H1 2022e – ABG


Tailwind for Studios, delivered positive adj. EBITDA in Q4
We expect a divestment of Sayduck in mid-Q2’22
Share trading at ‘22e-‘23e EV/sales of 0.5x-0.4x

Net sales grew 28% y-o-y, 6.5% above our expectations
GBK delivered a strong Q4, with net sales growth of 28% y-o-y, or 6.5% above ABGSCe. The strong activity for Studios, the largest segment, with awards won and announcements of five new or additional orders for a total value of SEK 49m in Q4’21, were clear reasons for the good Q4. Studio’s net sales grew 18%, which was 12% above our expectations, and achieved positive adj. EBITDA in Q4, one quarter earlier than communicated. NRIs were related to the cost optimisation programme. We expect continued strong market activity for Studios. Moreover, GBK announced in the report that it would divest Sayduck to focus on the core business. We think that this clarifies the company’s strategy of an explicit focus on the most important operations. The aim is to complete the divestment in ’22, and we estimate it will happen in Q2’22. Moreover, Hello Kitty (included in Games & Apps) is progressing according to plan, with a soft launch in Q2’22. Lastly, we were happy that management said that it no longer sees any need to raise additional capital to cover the business’s working capital requirements.

We raise net sales for Studios, but remove Sayduck
We raise the sales growth for Studios due to the strong growth in Q4 that we believe will continue in ‘22. Moreover, we have removed Sayduck from midway through Q2, which previously added 2% to our ‘22e and ‘23e sales. The net effect for sales is a 1% increase in ’22e and ‘23e. Furthermore, we still expect that GBK will become EBITDA-positive on the group level in Q2’22, but we have reviewed D&A costs and raised them slightly.

Fair value range of SEK 0.5-2.3 per share
The share rose 28% on the day of the report (OMXS +2.7%). We adjust our SOTP fair value range to SEK 0.5-2.3 per share (0.6-2.4), as we estimate higher net debt in ‘22.

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