Game Digital (LON:GMDG) is ending FY17 on revised expectations after demand for the Nintendo Switch caused a short-term hiatus, which we believe masks positive market developments. Refining its medium-term transition strategy, GMD is to exit its B2B web hosting operation. The market values GMD’s business at less than zero, but we keep our 83p share valuation.
Year finishes in line with revised expectations
On 30 June 2017, GMD advised the market that as a result of supply shortages of the successful Nintendo Switch, launched in March, second-half trading would be below expectations. Six weeks later, trading is in line with revised expectations. Cost savings of £5m have been realised, although costs are slightly higher than our forecast, which we reduce by £0.4m for FY17 only. Cash generation has been strong, with year-end net cash of £47m beating our forecast of £45m.
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