Strong Q4 sales, but COVID-19 postponements as well

New cost base causes large cuts to EBIT estimates

SOTP fair value SEK 2.1-7.1 (2.2-7.0) per share

Q4 revenue beat, new cost base weighs on EBIT
Bublar delivered a mixed Q4’20 report, where on the one hand revenues were stronger than expected but the cost base was substantially above our estimates. Revenues were SEK 60m, +8.1% vs. ABGSCe, driven by a stronger than expected performance by Goodbye Kansas Studio. The subsidiary has weathered 2020 relatively well given COVID-19, successfully moving its revenue base towards customers within gaming (double that of ’19). However, operating costs were SEK -93m vs. ABGSCe of SEK -67m. The increase was due to increasing investments in GBK’s in-house technologies and due to postponements in assignments within GBK and Vobling. Reported EBITDA was SEK -15m vs. ABG SEK -4m.

Mixed segment revisions drive estimate changes
In terms of estimate changes, the new cost base following the GBK acquisition drives our sweeping EBIT revisions. For Virtual Brains, we cut ‘21e sales by 48% (we only adjust H1e) given that we do not think that Hello Kitty or Otherworld Heroes will be launched until we see an easing of the effects of COVID-19. For Vobling, we increase our sales estimates by 9.3% for ‘21e given the new partnership with GLORIA, Europe’s largest fire and safety solutions company. For Sayduck, we keep our estimates intact. For Goodbye Kansas Studios, we increase ‘21e sales by 2.7% given recently announced deals. For example, the SEK 10m VFX deal with Sumo Digital will contribute through a milestone payment scheme, but part of the order will have contributed to Q4’20 as a start-up fee. We have also included Plotagon in our estimates, which we think will contribute ~SEK 5m in revenues ‘21e.

SOTP on ‘21e sales yields fair value of SEK 2.1-7.1 per share
We adjust our SOTP fair value range to SEK 2.1-7.1 per share (2.2-7.0). In addition, we find that at the current share price, Bublar is trading
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