Blue Star well-positioned for eSports boom

Victor Parker
Vox Newswire
11:55, 30th June 2022

Blue Star Capital (BLU Follow | BLU), a technology holding company, has announced 6-month results to 31 March 2022 alongside a positive update from key holding Guild Esports (GILD Follow | GILD).

Blue Star's portfolio consists of 11 disruptive technology companies, 8 of which are in the eSports and mobile gaming sector, 2 are in decentralised finance and payments, and one in the field of Non-Fungible Tokens.

Guild Esports, one of Blue Star's eSports holdings, is growing steadily and attracting partnerships with major brands including Bitstamp, Samsung, and Sony PlayStation. With Bitstamp, Guild signed its largest ever £4.5m 3-year sponsorship deal, bringing total signed sponsorship revenue to £8.56m. 

The company says it has sponsorships with around 30 tier-1 brands in advanced stages of negotiations, helped along by the success of its eSports teams which have won trophies in several major tournaments this year. The company also opened a new HQ in Shoreditch, providing state-of-the-art training facilities. 

Guild also delivered its own 6-month update today, reporting a tripling of revenue to £1.1m, reflecting the growth in sponsorship income. That drove a 6-fold increase in  gross profit to £710,000, although pre-tax losses widened by 15% as the company made long-term investments in teams and content creation amongst other things. It said that ongoing improvements to its efficiency of operations were expected to lead to a 20% decrease in costs.

Net cash for Guild  £6.1m on 31 March 2022, and its shares also commenced trading on the US OTCQB Venture Market. 

Blue Star's other companies are also growing nicely. Notably, its share in Dynasty Gaming and Media is now worth £4.8m, a significant premium to Blue Star's total investment of £968k. Similarly, Blue Star's interest in biometric technology platform Sthaler is now worth £387K, compared to a £50K investment, and its interest in NFT Investment is now worth £223K, compared to a £50K investment.

Despite its improved trading, Guild's share price declined significantly during the referenced period, from 5.1p/share to 1.95/p, resulting in a portfolio value decrease for Blue Star of £915K. This in turn resulted in a total net asset decrease for Blue Star of 7.8%, from £12.7m in FY21 to £11.7m at the end of the referenced period, a creditable outcome given wider weakness in growth and technology shares.

View from Vox

Despite Guild's decrease in share price, fundamentals for Guild remain sound. Revenue and profits are multiplying, and the company's 15% increase in loss for the period was mostly driven by long-term investments in teams and content, which are expected to provide a foundation for future revenue growth, as the pipeline of sponsorship deals deminstrates. £6.1m in cash on the balance sheet ensures flexibility and room for further growth-enhancing investment, while costs are being trimmed through efficiency-savings.

According to Newzoo, there are now more than 2.7 billion gamers globally, with gaming overtaking social media as the largest consumption of screen time in most developed markets. By 2023, Newzoo predicts the games market will be worth $200.8 billion a year, with the number of players worldwide surpassing the three-billion mark.

Kal Hourd, CEO of Guild noted: "The Company is benefitting from strong momentum driven by increasing revenue contribution from sponsorship deals signed previously. As a result, second half revenues are expected to show further strong growth compared with the first half." As it stands, the Company is well-positioned to follow through on that expectation and continue growing.

The same is true for Blue Star. Its chairman, Derek Lew, commented: "Given the increase in NAV of the overall portfolio since inception, plus sufficient cash reserves, improving liquidity provided by our listed investments and the increasing investor interest in the activities of our portfolio companies, the Board is confident that it is both well-funded and well-positioned to perform strongly in the second half of 2022 and beyond."

Follow News & Updates from Blue Star: Follow | BLU and Guild: Follow | GILD

Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

Recent Articles