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