Game On...

Well video games that is. When the words "hard core gamers" are mentioned, I assume this is the domain of teenagers, geeks and sci-fi enthusiasts. And then I stopped and thought a little more and would suggest that most people -and their grandma- would be comfortable on an iPad, playing games on phones (Temple Run anyone?) etc. In reality the UK's video game industry contributes £1.5bn to GDP annually and remains at the forefront in terms of size, innovation and creativity. The UK gaming industry is currently growing by 7% a year and close to making exciting further developments in virtual reality and augmented reality (when you walk around in a pretend world, like its real - think Avatar).

It is still a difficult and somewhat fragmented industry to enter and do well however the scope and possibilities are huge.

Meet Keywords Studios!

They provide technical services (art, engineering, audio, functionality....there is more) to the worlds leading video game companies. Their client list reads like the VIP list at Annabel's in Mayfair - Google, WB, Nintendo, Microsoft...not bad. I could list the games titles they have worked on but to be honest the only ones I recognised were Tomb Raider and Assassins Creed (yes, because of the movies).

Check it out:

(https://www.keywordsstudios.com/about-us/)

The studio is comprised of 46 individual studios, with their own area of expertise, located within 20 countries, across the globe.

So why do I care? hmm...like with anything, there is good and bad. Putting all the positives on one side; they have an upward share price projectory, reasonable expectation for future growth and a great balance sheet:

• Low level of unsold assets.

• Debt: Short Term Assets 4.2x cover.

• Debt: Operating Cashflow 70.8%

• Interest on Debt: EBIT 35.2x coverage.

Not so pleasing....

• ROE (Return On Equity) 5%

• ROA (Return On Assets) 3%

• ROC (Return On Capital) 9%

My personal view is the above metrics need to improve to consider holding shares long term as I would begin to question how efficiently the company is managing shareholder funds with returns <20%. But nothing to stop me buying and selling at profit as price increases.

Share Price 1,804 / £18.04 per share (as at 20.07.18)

• Within the last year; share price min £7.56 and max £18.78

• 5 year share price analysis shows Keywords share price volatility remains below markets averages.

• Earnings expected to grow more than 20% yearly.

• Revenue expected to grow 19.3% yearly.

A company and industry to watch out for!