Fable Media Group: Continues to outperform in a tough market
Research Update
2024-11-15
07:25
Analyst Q&A
Closed
Anton Hoof answered 4 questions.
Redeye updates its estimates after reviewing Fable Media Group’s Q3 report, which showed somewhat softer sales but stronger margins. The company continues to deliver strong performance with top-class margins despite a tougher market where peers are struggling to find growth.
Anton Hoof
Hjalmar Ahlberg
FMG reported another growth quarter with EBITDA margins exceeding 70%. Net sales amounted to SEK21.7m, an increase of 13% y/y (14% excluding the discontinued Viistek Media), 10% lower than our expectations of SEK24.1m. In terms of profitability, FMG reported an EBITDA of SEK15.2m and EBIT of SEK14.2m, roughly in line with our estimates of SEK15.9m and SEK14.7m, respectively. his corresponds to EBITDA and EBIT margins of 70% and 65%, respectively, exceeding our estimates by 4pp.
Investors following affiliate companies in the iGaming space are well aware of the tough market conditions, where regulations, lower marketing spending, and changes from Google have all negatively impacted the market throughout 2024. In light of this, we believe FMG’s financial performance is even more impressive and highlights the strength of being in Paid Media and having a high volume of revenue share agreements which accounted for 99% of total revenues in Q3.
Following the Q3 report, we have made limited revisions to our estimates, lowering sales by 3% for 2024e-2026e due to somewhat softer-than-expected sales in the quarter. FMG continues to strengthen its balance sheet by repurchasing its outstanding bond and is currently trading at an EV/EBIT (2025e) of 3.5x and a free cash flow yield of approximately 19%. We reiterate our base case of SEK12 and fair value range of SEK6-20.
| SEKm | 2022 | 2023 | 2024e | 2025e | 2026e |
| Net Sales | 61.5 | 83.5 | 97.3 | 111.9 | 128.7 |
| Sales Growth | 77.0% | 35.7% | 16.6% | 15.0% | 15.0% |
| EBITDA | 31.7 | 49.2 | 69.3 | 75.0 | 84.3 |
| EBIT | 26.2 | 34.6 | 50.2 | 75.0 | 84.3 |
| EBIT Margin | 42.6% | 41.4% | 51.5% | 67.0% | 65.5% |
| Net Income | 22.1 | 31.1 | 35.5 | 57.2 | 66.9 |
| EV/Sales | 1.5 | 3.2 | 3.2 | 2.3 | 1.5 |
| EV/EBIT | 3.5 | 7.7 | 6.2 | 3.5 | 2.3 |
In light of the tough market conditions, where several factors have negatively impacted the affiliation market, we see a solid report despite somewhat lower sales than expected. Net sales amounted to SEK21.7m, an increase of 13% y/y (14% excluding the discontinued Viistek Media), and 10% lower than our expectations of SEK24.1m. The company states that the quarter experienced lower sports betting margins, which has also been evident among its peers. Looking at profitability, FMG reported an EBITDA of SEK15.2m and EBIT of SEK14.2m, roughly in line with our estimates of SEK15.9m and SEK14.7m, respectively. The lower profitability is solely due to the lower sales, while the cost control was better than expected.
Disclosures and disclaimers