International Games System Co (IGS, 鈊象) last week saw its shares climb to their highest in nearly nine months, buoyed by positive market sentiment toward the online and arcade game developer’s business outlook this year.
Shares closed up 9.8 percent at NT$196 on Wednesday ahead of the 228 Peace Memorial Day holiday weekend, the highest since its closing price of NT$194.5 on May 28 last year, Taiwan Stock Exchange data showed.
IGS’ major products include slot games Golden Ho-Yeah (金猴爺) and Good Luck 777 (金好運), as well as mahjong game Star 3 in 1 (明星三缺一) and its Mangan Daheng (滿貫大亨) casino game.
On Tuesday last week, the company reported better-than-expected pretax earnings per share (EPS) of NT$1.56 for last month, while sales increased 48.08 percent year-on-year to NT$299.21 million (US$9.72 million).
Pretax profit was NT$1.02 billion for the whole of last year, with pretax EPS of NT$14.5, topping its local peers, although overall revenue decreased 7.44 percent to NT$3.07 billion from NT$3.31 billion due to weaker sales contribution from arcade games.
Arcade games, which accounted for 30 percent of the company’s total revenue last year, reported sales of NT$923 million, a 32 percent annual decrease, while online games, which make up 70 percent of its total revenue, saw sales increase 10 percent to NT$2.14 billion, the company said.
Thanks to the higher contribution from online and mobile games, the company’s gross margin for last year could rise to 88.2 percent from 85.3 percent a year earlier, Taishin Securities Investment Advisory Co (台新投顧) said in a note on Wednesday.
Coupled with foreign-exchange gains, net profit could reach NT$880 million, with earnings per share of NT$12.51, Taishin said.
As the company aims to maintain a high payout ratio policy to reward its shareholders, cash dividends might remain at NT$11 this year, Taishin said.
That would suggest a payout ratio of 87.93 percent based on Taishin’s EPS estimate and represents a dividend yield of 5.61 percent on Wednesday’s closing price of NT$196.
This year, the company said it aims to maintain its focus on the three major arcade game markets of China, the US and Southeast Asia.
IGS is also seeking to increase its market share by improving research and development capability, marketing its own intellectual property for classic games and developing new products, according to a conference call presentation document released by the company.
As for online games, the main focus is to increase the popularity of its app games and continue enhancing the gaming experience, the company said.
Taishin forecast that the company’s revenue would increase 10.8 percent this year to NT$3.4 billion and net profit would grow 31 percent to NT$1.15 billion.
Taishin has a target price of NT$213 on IGS, valuing the stock at 13 times its estimated EPS of NT$16.39 this year.
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