Following the disposal of its remaining real money gaming (RMG) operations in July 2019 Gaming Realms is now focusing on becoming a leading licensor of games to the global gaming industry. The licensing division focusses on IP brand and content licensing to partners, with the “Slingo Originals” games library being its flagship content. High margins are earned due to there being relatively few direct sales costs associated with such deals in the long-term. 

Results for the six months to June 2019 revealed the first set of figures since the RMG business disposal. Numbers for the period showed total group revenues from the continuing operations (excluding real money gaming and affiliates) rising by 18% to £3.2 million. Justifying the decision to focus on Licensing, revenues from this segment soared by 167% to £1.6 million. With new content going live with a number of new partners late in 2019 and into this year, 2020 is expected to see further significant growth

Applying a discounted peer derived multiple to our 2022 forecasts implies an equity valuation of £90.51 million. Discounted back to the end of 2020 at a rate of 12% derives a value of £72.15 million, or a price per share of 25.37p. This implies upside of 269% from the current price of 6.875p. We update coverage of Gaming Realms with a stance of Conviction Buy.