LONG UBISOFT UPDATE

BUY +58.33%

Ubisoft Cut to Hold at Kepler Cheuvreux, PT EU49 post inline numbers last and called -4-5% at CS

OUR VIEW: Numbers last night light pretty much inline. Not enough to push the stock post recent rally.

However what we found encouraging in the numbers was how well they are  executing on the  strategy to expand higher-margin digital revenue. By implementing live, multiplayer online events in core franchises, it has generated more consistent sales and boosted user engagement. Ubisoft is targeting digital sales of 1.2 billion euros by fiscal 2018-19, more than doubling from 2015-16. The effort should boost its gross margin, operating profit and free cash flow. Mobile, e-sports and cinematic content creation are growth opportunities.

Vivendi have a 25% stake in UBISOFT  as it seeks to rebuild a video game business following the purchase of Gameloft in July 2016. At the end of 2017, Vivendi will either need to launch a takeover bid for Ubisoft or cede its double voting rights on some shares, due to French takeover laws. A BID is coming.

We continue to view the industry as a key beneficiary of changes in media consumption and the beneficiary of fast broadband connectivity.

We like Ubisoft’s “as is” standalone strategy.It is strong and its main idea is to embrace a digital first policy. This coupled with Vivendi’s eventual bid make this our favourite E-gaming stock,

E-Gaming is the future. Staying Long.

 

LONG UBISOFT UPDATE
GREAT SET OF NUMBERS!

Tuesday • 25th April 2017 • 14:59

BUY UBISOFT: Vivendi to accelerate acquisitions in video games

VIVENDI-AGM/STRATEGY EXCLUSIVE-Vivendi to accelerate expansion in video games and advertising – sources Reuters | Apr 25, 2017

* Considering mergers with Havas, Ubisoft in 2017 – sources
* Chairman Bollore under pressure to detail strategy
* Spent 15 bln euros on shareholders, acquisitions since 2014

Advertising group Havas and video games maker Ubisoft are expected to be the first targets as Vivendi moves into the next phase of its expansion, the sources said.

“The logical thing would be to buy Ubisoft,” the second source said, adding that Bollore would not buy the video games maker at any price and could consider other targets in China.

FULL article below.

Our view:
We love the name and Ubisoft is our european name to play the the E-Gaming theme.

2016’s Cyber Monday was the biggest day in the history of U.S. e-commerce. Consumers spent ~$3.45 billion online on Monday. The top two items were eGaming consoles: Sony PS4 and the Xbox One.

E-GAMING is the future , as the population playing online video games via consoles and mobile is growing and already has 2.6B users world wide.
Mobile games revenues amount to $44.8B in 2016 and represent 82% of all global app revenues (Source: NewZoo) and is forecast to grow at 14.3% CAGR (2015-2020) to $58.1B.

We continue to view the industry as a key beneficiary of changes in media consumption and the beneficiary of fast broadband connectivity.

We like Ubisoft’s “as is” standalone strategy.It is strong and its main idea is to embrace a digital first policy. This coupled with Vivendi’s eventual bid make the name a compelling buy even post the rally this year. E-gaming is the future.

+37.86% so far and happy to ADD/Stay Long

See previous thoughts at http://monacoalpha.com/ideas/long-ubisoft-update/

 

BUY UBISOFT: Vivendi to accelerate acquisitions in video games

UBISOFT. Numbers were blow out for us this morning post a few bearish calls going into this print.

Revenue was down in Q3 but margins improved which should lead to 10% upgrades to cons.

Ubisoft is becoming more profitable, with more recurring revenue and a larger gaming community.

Ubisoft said that by the end of the current year it expects to meet or exceed targets it originally set for fiscal 2018-19 of achieving 45 percent digital revenue and 17 percent recurring player income.

Targets for fiscal 2017-18 will be announced in mid-May and “will include an increase in our topline and operating income, while factoring in the very competitive environment that we expect to see throughout the year,”

Ubisoft has an undemanding valuation trading at 12.8x FY17/18e EBIT vs 15.6x for EA and 14.6x for Activision.

That’s the financials out the way but for us Ubisoft is a thematic play on E-Gaming. E-GAMING is the future and the industry will expand dramatically.

EA estimate 80M next generation console units will be in place by the end of 2016 and the install base right now is 33% higher than the previous generation consoles. Mobile; internet gamers represent an addressable market of 2.6 billion people world wide. 2016’s Cyber Monday was the biggest day in the history of U.S. e-commerce. Consumers spent ~$3.45 billion online on Monday. The top two items were eGaming consoles: Sony PS4 and the Xbox One.

The “next billion” to get online in areas like Southeast Asia and India will drive double-digit growth for at least the next three years; the Latin American market alone grew 56% year-on-year in 2016. (SuperData)

Great set of numbers exposed to a mega trend in our opinion and that’s not factoring in the Vivendi bid in the wings.

Stock trading up 6% already today but we would be adding here and have a PT of 44 EUR. Currently +8.35% on the trade.

 

BUY UBISOFT
E-GAMING, PLAY THE FUTURE

Tuesday • 06 December 2016 • 10:03

Ubisoft is a BUY for us at these levels as a part of the bigger thematic play in E-Gaming.

2016’s Cyber Monday was the biggest day in the history of U.S. e-commerce. Consumers spent ~$3.45 billion online on Monday. The top two items were eGaming consoles: Sony PS4 and the Xbox One.

Ubisoft’s pipeline is very rich with a number of new releases that will boost its revenue generation. 5 NEW AAA games in H2: Watch Dogs 2, Steep, South Park, For Honor and Ghost Recon: Wildlands.

E-GAMING is the future and the industry will expand dramatically. EA estimate 80M next generation console units will be in place by the end of 2016 and the install base right now is 33% higher than the previous generation consoles. Mobile; internet gamers represent an addressable market of 2.6 billion people world wide.

Ubisoft is targeting digital sales of 990M EUR ($1.1B) by fiscal 2018-19, doubling from 2015-16, which should boost its gross margin, operating profit and FCF.

On top of that there is Vivendi who has, once again, increased their shareholding in Ubisoft. Vivendi announced it crossed the statutory threshold of 24% of Ubisoft’s share capital on November 4, 2016. The current 24.059% of the share capital and 21.296% of the voting rights of Ubisoft, is an increase from the 22.8% of the share capital and 20.2% of the voting rights announced in July.

Vivendi has taken a 24.1% stake in Ubisoft as it seeks to rebuild a video game business following the purchase of Gameloft in July. Ubisoft’s founding Guillemot family has increased its stake in the company to 19.2% in a bid to ward off Vivendi, setting up a showdown should Vivendi seek board seats.

Ubisoft’s “as is” standalone strategy is strong and its main idea is to embrace a digital first policy. Key focus is on product and here we feel upcoming titles from Ubisoft look impressive. Ubisoft will be the only leading developer to launch three open world games this year: ‘Steep’, ‘Ghost Recon’ and ‘Watch Dogs 2’.

E-GAMING is a future for revenue generation, as the population playing online video games via consoles and mobile is growing and already has 2.6B users world wide. UBI has great pipeline that will secure its revenue generation in the LT.

With both stand alone strategy, M&A on horizon and rich pipeline we feel this is a good level (19% off the YTD highs) and time to initiate a BUY position.