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magazineChinese mobile deal helps to revive Codemasters’ share price
Codemasters (CDM:AIM) 180.5p
Loss to date: 1.1%
Original entry point: Buy at 182.5p, 22 November 2018
A deal to make a new mobile game with Chinese group NetEase triggered a 12% rise in Codemasters’ (CDM:AIM) shares on 8 January.
Codemasters will receive at least $8m in revenue over the next three years, of which $4m is expected to come in the current financial year. That prompted the company to guide for its earnings in the period ending 31 March 2019 to beat previous expectations.
‘In addition to the apparent cash benefits, we believe the deal also highlights the value and monetization potential of Codemaster’s proprietary technology and IP assets, validating the company’s position as a leading specialist in racing titles,’ says Jefferies analyst Ken Rumph.
The other bit of good news for investors to note is Chinese regulators lifting a suspension on new games in late December 2018. Rumph says this is a positive development for Codemasters as its DiRT Rally 2 title is expected to launch next month and will be published by NetEase in China.
Codemasters formed a partnership deal with NetEase last November whereby the latter would be the exclusive publisher for three of the UK company’s upcoming PC titles in China, which is the world’s biggest gaming market. Adding a mobile game therefore strengthens the relationship between the two parties.
These developments should hopefully help to win back the market’s support following a patchy time for the share price. Keep buying.
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