Last month, Helsinki, Finland-based KuuHubb reported its FQ2/18 financials, which showed a revenue increase of 123 per cent over the previous quarter, much of those gains coming from its leading digital colouring book app, Recolor, says Garcea, who thinks that KUU will be EBITDA positive by FY2019.
“We believe momentum continued for KUU into FQ3/18 (Mar) and expect results to be up q/q, driven by growth in Recolor and MyHospital,” says the analyst in a research note to clients. “In addition, the acquisition of the blockchain-enabled mobile e-sports platform (Valiance UG) is designed to support both mobile e-sports competitors and content creators and provides them with opportunities to monetize their involvement playing e-sports titles.”
Garcea says that shareholder value should come from key acquisitions of proven, under-appreciated assets, projected that the company’s capable management team should be launching its mobile games in India and Japan this quarter.
“KuuHubb’s co-founder and CEO, Jouni Keränen, has over 18 years of international business and management experience, with particular experience and in-depth knowledge of the online games industry and market in China and elsewhere in Asia, which are a particular area of focus for KuuHubb in its business plans,” the analyst says.
“We believe there is plenty of upside in our estimates as KUU expands across demographics and into adjacent lifestyle categories (like interior design, fashion and jewelry, home and garden, etc.),” says the analyst. “We note that the Global Social App comparables are trading on average (excl. Facebook) at a multiple of US$40/monthly active users (MAU). Applying this multiple to KUU’s 7.0 million MAUs would value the Company at US$280 million (or C$6.50-7.50/shr).”
The analyst’s $4.00 target price represents a 413 per cent projected return on investment as of publication date.
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