Even as GAME Digital plc (LON:GMDG) faces short-term trading pressure, its developing BELONG gaming arena concept is arguably part of the answer of what to do with the UK’s high streets and shopping centres. The first BELONG sites under the February 2018 agreement with Sports Direct (LON:SPD) are now opening. With GMD’s share price still less than net cash of 32p, neither the existing business, which currently contributes £10m of EBITDA, nor BELONG which we value at 23p, are attributed any value by the market. Our total valuation is 75p.
Strategy focuses on BELONG
The original change strategy at IPO in 2014 has coalesced around the roll-out of the BELONG gaming arena concept. Two years’ trial in 19 locations has shown that arenas beyond a critical size have strong returns, and the concept fits with shareholder Sports Direct’s “elevation strategy”, which includes other experiential concepts such as gyms in large-scale retail formats. The February 2018 collaboration agreement formalises and funds that strategy, and the first resulting sites are now opening. We now model BELONG in detail to achieve EBITDA of £22m by FY22, with 4,079 playing stations in 126 locations (GMD’s target is 5,000).
To read the entire report Please click on the pdf File Below: