Last recommendation BDM: HOLD with target price 11,5 PLN/share (2022/05/20) LINK
BDM Comment: SimFabric's results for Q2'22 are below the previous estimates presented by the company at the beginning of September (H1'22: revenues from sales of products = PLN 4.6 million, EBITDA = PLN 3.2 million, Gross profit = PLN 2.7 million, profit net = PLN 2.6m) and our expectations, therefore we perceive them negatively. In the reporting period, the company generated PLN 2.4 million in revenues (-1.0% y/y). ). In H1'22, SimFabric generated PLN 4.9m in revenues (+ 7.7% y/y), of which 32.1% (PLN 1.6m) are revenues from e-learning materials, 2.8 PLN million (56.6%) three games, and PLN 0.5 million other. In 2Q'22, the operating costs amounted to PLN 1.9 million (+ 7.7% y/y). As usual, the highest cost is related to the production of games, hence the costs of external services amounted to PLN 1.3 million (+ 11.8% y/y), which was higher than our expectations, hence we perceive it negatively. In the last quarter, the company generated PLN 1.1 million EBITDA (+ 11.8% y/y), and at the level of net profit of parent comapny it managed to generate PLN 0.3 million (+ 55.6% y/y). Cash flows from operating activities in 2Q'22 amounted to -PLN 0.2 million, cash flows from investing activities were equal to -PLN 0.8 million, and financial flows were equal to PLN +0.4 million. At the end of June 22, the company had PLN 7.1m in cash and cash equivalents (-PLN 0.6m q/q). The company's intangible assets increased from PLN 5.5m at the end of Q1'22 to PLN 5.6m at the end of Q2'22 (of which PLN 4.3m were costs of games in progress (PLN +1.1m q/q) ), and PLN 1.3 million in costs of completed games.
- In 2Q'22, the company generated PLN 2.4m in revenues (+ 18% y / y). In H1'22, SimFabric generated PLN 4.9m in revenues (+ 7.7% y / y), of which 32.1% (PLN 1.6m) are revenues from e-learning materials, 2.8 million PLN (56.6%) three games, and PLN 0.5 million others.
- In the reported period, the operating costs amounted to 1.9 million (+ 7.7% y / y). As usual, the highest cost is related to the production of games, hence the costs of external services amounted to PLN 1.3 million (+ 11.8% y / y).
- In the last quarter, the company generated PLN 1.1 million EBITDA (+ 11.8% y / y), and at the level of net profit n.a. it managed to generate PLN 0.3 million (+ 55.6% y / y).
- Cash flows from operating activities in 2Q'22 amounted to PLN -0.2 million, cash flows from investing activities were equal to PLN -0.8 million, and cash flows from financial activities amounted to PLN +0.4 million. At the end of June 22, the company had PLN 7.1m in cash and cash equivalents (-PLN 0.6m q / q).
- The company's intangible assets increased from PLN 5.5m at the end of Q1'22 to PLN 5.6m at the end of Q2'22 (of which PLN 4.3m were costs of games in progress (PLN +1.1m q / q), and PLN 1.3m for the costs of completed games.
- Trade and other receivables increased from PLN 7.3 million at the end of Q1'22 to PLN 8.6 million at the end of June '22 (PLN 1.3 million).
- During 1H'22, the company and the entire SimFabric group continued the implementation of the Capital Group's Sustainable Development Strategy, initiated in 2019 and currently consisting of 6 pillars. In addition to the existing five pillars: creating proprietary games, game porting, research and development services and creating mobile games and virtual reality goggles, this year the sixth pillar has been added, which is the creation of games in the Play to Earn model based on blockchain and NFT technology.
- The development of four subsidiaries begins to enter the next phase, which begins with VRFabric with the submission of an application for introduction of shares to trading on the NewConnect exchange.
- At the end of June '22, the SimFabric team consists of a total of 70 people, ie: 4 people employed on specific specific contracts, the rest on the basis of b2b contracts. MobileFabric, VRFabric and GR Games employ four people on the basis of a specific work contract, Blind Warrior employs 3 people on a mandate contract.
Analyst: Krzysztof Tkocz krzysztof.tkocz@bdm.pl tel.: (+48) 516 086 705
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