By Richard Gill, CFA

In a brief statement, Gaming Realms (GMR), the developer and licensor of real money, mobile-focused gaming content, has announced the launch of new game MONOPOLY Slingo. The game launched on 6^th August and has been developed in collaboration with Monopoly’s owner, the NASDAQ listed games and entertainment giant Hasbro, Inc.  It incorporates familiar features from the classic Monopoly game, mixed with the trademark Slingo format.

Developed in-house through a sub-licence with SG Digital (a division of Scientific Games), MONOPOLY Slingo is the second game release following Slingo Rainbow Riches, launched in 2018 as part of the previously announced three-year worldwide licensing deal with SG Digital. The game will be launched across the Gaming Realms’ distribution network which will reach operators such as: GVC Group, William Hill, 888, Mecca Bingo, Gaming Innovation Group, Skill on Net and Vera and John.

Assessment

While being a brief announcement, this latest game release demonstrates Gaming Realms’ new licence focused strategy, with the company working together with key industry partners to exploit the brand value of its popular Slingo game. The company has had previous success by merging Slingo with other popular brands, including Deal or No Deal and Who Wants to be a Millionaire, amongst others. With Monopoly having been played by over a billion people worldwide since its launch in 1935, this is a brand with high global awareness and we believe that this should prove to be another popular version of the Slingo format.

We recently published a full update note on Gaming Realms following the conclusion of the sale of its real money gaming businesses, with the focus now upon expanding the high margin licensing division which grew revenues by 167% in 2018. With costs reduced significantly following the transaction close and the licensing model having very high margins, we believe that Gaming Realms looks well placed to grow profits significantly in the coming years, especially with two recently signed distribution deals, with Relax Gaming and Scientific Games, providing the opportunity for a marked acceleration of growth from H2 this year and beyond.

Our discounted peer based EV/EBITDA valuation suggests a target price of 26.79p for the shares. With the current price being 6.25p our valuation implies 329% upside potential. We re-iterate our stance of Conviction Buy.

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