Bigben and Nacon at half mast: an insufficient return to growth

Bigben lost 4.98% to 16.78 euros while its subsidiary specializing in video games, Nacon, yielded 3.60% to 5.63 euros. While the two companies returned to growth in the third quarter, which ended at the end of December, Nacon’s performance is somewhat disappointing, according to Midcap Partners. On the stock market, the decline of Bigben and Nacon is not isolated, the other video game publishers are also falling, including Ubisoft.

Sales for the group as a whole increased by 4.5% over the period to 91.3 million euros. Nacon grew by 5.2% to €51.2 million and the Bigben AudioVido/Telco business grew by 3.5% to €40.1 million.

At the end of the fourth quarter, the Bigben group expects to achieve the objectives announced during the publication of the 2021/22 half-year results.

Bigben is aiming for a turnover of between 270 and 300 million and a current operating result (ROC) of around 24 million, ie a margin of 8.4% in the middle of the range. Nacon is targeting sales of between 150 and 180 million euros and operating profit of around 20 million euros, ie a current operating profit rate of 12.1% in the middle of the range.

“The bottom of the range seems to us the most likely today,” warns Micap Partners about Nacon.

For 2022/23, the group, present in the publishing of video games, mobile and gaming accessories and audio products, anticipates a strong increase in sales in its two areas of activity with a turnover which should be between 400 and 450 million euros and a current operating profit rate above 14%.

This growth will come in particular from the very sustained editorial activity of Nacon Gaming (releases of more than 15 games over the financial year) and from a Bigben AudioVido/Telco division boosted by the good orientation of the 5G smartphone market and by the integration of Metronic in a full year.

Reacting to this publication, Invest Securities confirmed its Buy recommendation and raised its price target from 24.4 euros to 24.7 euros on Bigben. “This publication does not hold any surprises, so that the investment thesis on Bigben is unchanged”, explains the research department. According to him, Bigben makes it possible to buy Nacon at a discount, even if the latter is reduced (20% against 40% a year ago).

Midcap Partners lowered its Buy Hold recommendation and maintained its price target of 19 euros on Bigben. The analyst justified his decision by the relative outperformance of the group compared to its daughter (-12% over one year vs. -25% for Nacon) as well as a now more limited upside potential.

AOF 2022