Rovio - Write-up

By: Jesper Henrikson

Investment thesis:

  • EV/fcf 7 and p/e 13 for e2020
  • Profitability improvements in 2020 come from unchanged revenues with significantly lower UA costs
  • The view of the market is that revenues are boosted by Covid and that increased UA is needed to maintain revenue level, which will then reduce profits
  • The investment case is based on UA investments in 2019 instead were undisciplined, and that higher payback requirements will help to maintain revenue despite lower UA investments
  • According to outlook statements, Rovio seems to have become more careful with UA and started milking the cash-cow games
  • In 2020, the company has made buy-backs of almost 10% of the company – which is likely to continue 2021
  • A low valuation combined with several optionalities to surprise on the upside makes the investment appealing 

Link to full write-up


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