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Trade leads growth at Games Workshop

The group's trade division added around 20 new accounts, leading to yet another record performance
Trade leads growth at Games Workshop

Games Workshop (GAW) registered yet another record performance in the six months to the beginning of December 2019, with sales and profits reaching record highs. Revenues grew 16 per cent at constant currencies, outpaced by operating profits, which were up 40 per cent. The group grew in all divisions, but trade led the way, with around 200 net new trade outlets and 27 per cent sales growth.

IC TIP: Buy at 6,675p

In line with management’s strategy, royalty income increased in the period, more than doubling to £10.7m. However, management cautioned that future income is difficult to predict, as the group recognises royalty income only when the contract is signed. The group is at work developing a TV series based in its universe, but at present no production contracts have been signed or royalties booked.

Games Workshop’s business is reliant on continued interest from enthusiasts, and management’s efforts to engage with and expand that community seem to have paid off. The number of users accessing the Warhammer community website was up 48 per cent against the same period last year, and the number of visits per user also increased.

House broker Peel Hunt increased its adjusted pre-tax profit and EPS forecasts by 3 per cent each to £96m and 232.8p, respectively, compared with £81.2m and 198.2p in FY2019.

GAMES WORKSHOP (GAW)  
ORD PRICE:6,675pMARKET VALUE:£ 2.18bn
TOUCH:6,670-6,695p12-MONTH HIGH:6,960pLOW: 2,785p
DIVIDEND YIELD:2.8%PE RATIO:27
NET ASSET VALUE:370pNET CASH:£33m
Half-year to 1 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201812540.810165
201914858.6146100
% change+18+44+44+54
*Ex-div:23 Jan   
*Payment:02 Mar   
*Dividends paid quarterly