{"id":279,"date":"2018-04-18T21:35:42","date_gmt":"2018-04-18T21:35:42","guid":{"rendered":"http:\/\/www.cheapertrader.com\/?p=279"},"modified":"2018-04-18T21:48:16","modified_gmt":"2018-04-18T21:48:16","slug":"sumo-group-plc-one-to-watch","status":"publish","type":"post","link":"https:\/\/www.cheapertrader.com\/index.php\/2018\/04\/18\/sumo-group-plc-one-to-watch\/","title":{"rendered":"Sumo Group PLC &#8211; one to watch"},"content":{"rendered":"<p>The video game sector has seen significant growth over the past couple\u00a0of years. Leading companies such as\u00a0Ubisoft, Electronic Arts and Take Two have all seen their share prices more than triple in the past few years and with the video game market continuing to grow and other related markets such as\u00a0virtual reality\u00a0still relatively untapped, there is no doubt in my mind that these companies will continue to grow for the foreseeable future.<\/p>\n<p>Sumo Group PLC (LON: SUMO), in comparison to the 3 behemoths mentioned earlier, was started in 2003 and only became a public company\u00a0only a few months ago &#8211; in Dec 2017. The company provides video game development services (e.g art development, etc) to gaming publishers and has close relationships with established publishers such as Microsoft, Sony and Sega\u00a0. The company now has\u00a0a market cap of \u00a3163 million, with the current share price being slightly higher that the IPO share price. The company currently\u00a0has game development studios in Vancouver, Sheffield, Nottingham, Newcastle and India.<\/p>\n<p><script async src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script><br \/>\n<ins class=\"adsbygoogle\" style=\"display: block; text-align: center;\" data-ad-slot=\"5410859267\" data-ad-client=\"ca-pub-3153294147011912\" data-ad-format=\"fluid\" data-ad-layout=\"in-article\"><\/ins><br \/>\n<script>\n     (adsbygoogle = window.adsbygoogle || []).push({});\n<\/script><\/p>\n<p>In addition to the provision of contracted game development services, the company also produced their first maiden AAA title &#8216;Snake Pass&#8217; last year.\u00a0\u00a0 The <a href=\"https:\/\/www.sumogroupplc.com\/app\/uploads\/2017\/12\/Project_Brightside.pdf\">IPO prospectus indicated<\/a>\u00a0that Snake Pass was released in March 2017, and\u00a0as at\u00a0Nov 2017, 170,000 units were sold, a return on investment of 83%. Although development of new AAA titles will be a part of the strategy, the main model will continue to\u00a0 focus on\u00a0generating contracted development fees to minimize risk and capitalize on the sector&#8217;s growth.<\/p>\n<p>On the financial side, the IPO prospectus indicated that HY 2017 resulted in \u00a314 mln in revenues, with an operating profit of \u00a3431 mln and EBITDA of \u00a33.4m\u00a0(yearly runrate of 28 mln over the year, EBITDA of ~\u00a37m)<\/p>\n<p>The next update for the company is slated for next week &#8211; April 23rd. This update\u00a0should give further clarity on the current trajectory of the company; It will be very interesting to see what sort of financial numbers are published in the update.<\/p>\n<p>The company has already given preliminary guidance that it <a href=\"https:\/\/www.investegate.co.uk\/sumo-group-plc--sumo-\/rns\/pre-close-trading-update-and-notice-of-results\/201802010700085560D\/\">expects results to be at least\u00a0in line with management expectations<\/a> and that the IPO was used to repay bank and shareholder debt. Management has also stated that the company now has significant positive cash balances. However, since the IPO, the company has\u00a0acquired CCP Games&#8217; Newcastle\u00a0studio\u00a0(renamed to SUMO Digital). Although the company stated that nominal cash was used in the acquisition, it will be interesting to have a view on the current cash balances of the company.<\/p>\n<p>It must be remembered that the video game sector can be unpredictable &#8211; many video games do not sell well and studios can easily go out of business. Nevertheless, there is also the possibility that a video game can be a runaway success, and such success can result in seriously high valuations for companies who own the successful franchises\u00a0(e.g Candy Crush &amp; King Digital that was acquired for $5 billion)<\/p>\n<p>Lastly, on the institutional investor front, it\u00a0is clear that the company has institutional investors interested, with LionTrust Investment Partners\u00a0<a href=\"https:\/\/tools.eurolandir.com\/tools\/Pressreleases\/GetPressRelease\/?ID=3430898&amp;lang=en-GB&amp;companycode=uk-sumo&amp;v=\"> taking an interest in February<\/a> and Blackrock Inc <a href=\"https:\/\/tools.eurolandir.com\/tools\/Pressreleases\/GetPressRelease\/?ID=3431945&amp;lang=en-GB&amp;companycode=uk-sumo&amp;v=\">increasing their interest<\/a> in March.\u00a0 This is definitely a good sign for new investors &#8211; the current share price appears to be a decent entry point for the individual investor.<\/p>\n<p>As always though, please do your own research before buying\/selling this share; the opinions above are only my personal views and should not be considered as advice.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The video game sector has seen significant growth over the past couple\u00a0of years. Leading companies such as\u00a0Ubisoft, Electronic Arts and Take Two have all seen their share prices more than triple in the past few years and with the video game market continuing to grow and other related markets such as\u00a0virtual reality\u00a0still relatively untapped, there [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":290,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"offerexpiration":[],"class_list":["post-279","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk-companies"],"_links":{"self":[{"href":"https:\/\/www.cheapertrader.com\/index.php\/wp-json\/wp\/v2\/posts\/279","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cheapertrader.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cheapertrader.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cheapertrader.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cheapertrader.com\/index.php\/wp-json\/wp\/v2\/comments?post=279"}],"version-history":[{"count":11,"href":"https:\/\/www.cheapertrader.com\/index.php\/wp-json\/wp\/v2\/posts\/279\/revisions"}],"predecessor-version":[{"id":293,"href":"https:\/\/www.cheapertrader.com\/index.php\/wp-json\/wp\/v2\/posts\/279\/revisions\/293"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cheapertrader.com\/index.php\/wp-json\/wp\/v2\/media\/290"}],"wp:attachment":[{"href":"https:\/\/www.cheapertrader.com\/index.php\/wp-json\/wp\/v2\/media?parent=279"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cheapertrader.com\/index.php\/wp-json\/wp\/v2\/categories?post=279"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cheapertrader.com\/index.php\/wp-json\/wp\/v2\/tags?post=279"},{"taxonomy":"offerexpiration","embeddable":true,"href":"https:\/\/www.cheapertrader.com\/index.php\/wp-json\/wp\/v2\/offerexpiration?post=279"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}