Team17 (TM17) management has not picked up on a clear impact from the coronavirus outbreak thus far in 2020, but it is not hard to see how more consumer time spent indoors could benefit demand for the video games developer’s products. Add in that most of Team17’s games are developed by third parties in small business units scattered around the world, and Team17 looks a good defensive play against any further virus-led volatility over the coming months.
Last year brought a more than doubling of Team17’s pre-tax profits, with sales from the group's share of third-party sales accounting for 83 per cent of turnover, up from 74 per cent last year. At seven games, Team17 made fewer launches than the 12 it achieved in 2018, but management said that the proportion of revenues from new releases compared with its back catalogue will vary from year to year – it has already announced 10 games this year, with three launching during the first half. Revenues are accordingly expected to be weighted towards Team17’s second half. The back catalogue, meanwhile, recently reintroduced legacy franchise Worms, which has generated income for more than 25 years – far longer than usual expectations of around three to five years.
Peel Hunt forecasts full-year 2020 adjusted pre-tax profits and earnings per share of £19.9m and 12.8p respectively, rising to £20.7m and 13.3p in 2021.
| TEAM17 (TM17) | ||||
| ORD PRICE: | 535p | MARKET VALUE: | £703m | |
| TOUCH: | 530-540p | 12-MONTH HIGH: | 560p | LOW: 195p |
| DIVIDEND YIELD: | nil | PE RATIO: | 41 | |
| NET ASSET VALUE: | 61p* | NET CASH: | £41.9m** | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 (pre-IPO) | 10.4 | 3.8 | na | † |
| 2016 (pre-IPO) | 13.5 | 2.8 | na | † |
| 2017 (pre-IPO) | 29.6 | 5.4 | 4.3 | nil |
| 2018 | 43.2 | 8.7 | 6.1 | nil |
| 2019 | 61.8 | 19.2 | 12.9 | nil |
| % change | +43 | +121 | +111 | – |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £56.9m, or 43p a share **Includes lease liabilities of £1.6m | ||||
