Edison Investment Research Limited: Media and Games Invest (M8G): Initiation - Focus on ad software platform

London, UK, 15 July 2022

Media and Games Invest (M8G): Initiation - Focus on ad software platform

Media and Games Invest (MGI) is grasping an opportunity to leverage its extensive first-party data resource, generated through its games content, to build out a full stack advertising software platform that can offer good returns to both advertisers and publishers. Changes to the advertising ecosystem to protect user privacy are prompting a strategic shift to first-party data, with added benefits of improved targeting and transparency. MGI has already assembled a strong offering on the supply side and is now expanding its offering on the demand side, through organic growth and targeted M&A, which should generate further scale and efficiency.

The share price has fallen by roughly 50% year-to-date, while global adtech peers have fallen by 47% on average, reflecting the market rotation away from high-growth sectors. The quoted gaming companies have done a little better, falling by 16%. MGIs shares are valued below both sets of peers. If they were to trade at parity on average across FY2123, the price would be 5.06, ahead of the level derived by a DCF (3.92) and above the price at which they started the year.

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