Fron­tier De­vel­op­ments (FDEV:AIM) £11.05

Shares - - TALKING POINT -

Founded in 1994 by CEO David Braben, co-au­thor of the sem­i­nal Elite game, Fron­tier

De­vel­op­ments’ (FDEV:AIM) shares have soared since its July 2013 AIM de­but at a 127p is­sue price.

Chi­nese in­ter­net-to-in­ter­ac­tive en­ter­tain­ment ti­tan Ten­cent put its stamp of ap­proval on Fron­tier last sum­mer, in­vest­ing £17.7m in re­turn for a 9% stake, to help Fron­tier at­tack the vast Chi­nese mar­ket and scale-up by in­creas­ing the fre­quency of ma­jor re­leases.

Fron­tier De­vel­op­ments en­joyed ma­te­rial fore­cast up­grades for the year end­ing 31 May 2019 fol­low­ing a pos­i­tive trad­ing up­date (3 Jul), in which it flagged early suc­cess with its third game fran­chise, Juras­sic World Evo­lu­tion, which has quickly passed 1m units sold.

Sig­nif­i­cantly, the up­grade was based on fore­casts for the Juras­sic World ti­tle, to­gether with the ex­pected per­for­mance of Fron­tier’s first two fran­chises, Elite Dan­ger­ous and Planet

Coaster. Both are per­form­ing well and in ad­di­tion to pro­duc­ing its own games, Fron­tier will also con­sider third party pub­lish­ing to ac­cel­er­ate its growth plan, namely con­trol­ling the pro­mo­tion and dis­tri­bu­tion of other de­vel­op­ers’ games.

Fin­nCap an­a­lyst Lorne Daniel’s up­graded full year to May 2019 fore­casts point to a leap in sales from £34m to £75.3m, send­ing ad­justed profit be­fore tax roar­ing higher from £2.6m to £16.5m, with po­ten­tial for fur­ther up­grades if suc­cess con­tin­ues. (JC)

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