iCandy Interactive Limited (ASX: ICI)

ICI is a mobile games publishing company that owns mobile interactive entertainment studios in Asia. Some of its game titles include Star Girl, Garfield, Doraemon, Astro Boy, and many others. ICI was listed on ASX in February 2016. It holds a market capitalization of AUD 67.63 million as of 17^th November 2021.

Financial and Operational Updates: With the launch of Claw Stars, the company made record revenues of AUD 299.57k in the first two weeks. It had clocked retention rate of 25%. Its acquired Nextgamer platform in March 2021 caters to a rapidly growing hyper-casual gaming platform which is expected to unlock additional revenue streams to ICI going forward. In September 2021, ICI acquired a 7.78% stake in Mighty Kingdom for a total consideration of AUD 1.59 million. Potential synergies are expected from the deal. In September 2021, it had announced an on-market share buy-back plan to buy back up to 36 million shares. So far, ICI bought back ~1.15 million shares between October 6 and October 27, 2021. It had closed the period with a cash balance of AUD 7.915 million as of September 2021.

The stock generated returns of ~66.67% in the past six months. On a TTM basis, ICI is trading at EV to Sales multiple of 16.4x, far higher than the Technology industry median of 5.5x, thus implying overvaluation. Considering the expected synergies from the recent acquisitions, the launch of new titles, rally in the stock price in recent periods, and TTM-based valuation, we suggest investors book profit and give a “Sell” rating on this stock at the closing price of AUD 0.1350 per share, up ~17.39% as of 17^th November 2021.

Weekly Daily Technical Chart – ICI

Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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