Winking Studios, listed in November 2023, has emerged as one of the top-performing IPOs on the Singapore Exchange (SGX). From an IPO price of 20 cents, shares in the company have steadily gained to close at 32 cents on Jan 20, a gain of about 8.5% for the day following the announcement of its latest acquisition in China. This brings the group’s maket capitalisation to $145.6 million.
The company also claims to be the third-largest gaming development and production player in Asia and the fourth-largest globally. It is 64.2% owned by Acer Gaming, the e-sports division of leading Taiwanese hardware and electronics giant Acer Inc, with both companies listed on the Taiwanese Stock Exchange.
With the proceeds from its IPO, Winking Studios is expanding its presence in North Asia, Southeast Asia and Europe. Since listing, the company has made a series of acquisitions. In December 2023, it purchased Taiwan-based On Point Creative. In April 2024, it acquired Malaysian art and animation outsourcing firm Pixelline Production. On Jan 17, it announced the acquisition of Shanghai Mineloader Digital Technology in China for $27.2 million — its largest deal to date.
“Mineloader’s team of more than 460 employees will be a valuable addition to our group’s existing headcount of over 800, boosting our service offerings in this segment and adding new clients,” says Winking Studios’ executive chairman, CEO and founder Johnny Jan.
Winking Studios’ earnings growth trajectory has yet to fully form. In its most recent 1HFY2024 ended June 30, 2024, earnings declined by 28% y-o-y to US$909,000 ($1.24 million) from US$1.26 million a year ago, due mainly to heftier marketing costs plus listing expenses.
The company had to put up with lower gross margins of 27.9% from 30.7% a year ago, amid the completion of its acquisitions and the integration process, which reduced efficiency. Several projects have also been deferred to 2HFY2024 on the request of customers. Nonetheless, revenue was up 7.1% y-o-y to US$15.2 million, with orders from both new and existing customers.
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Jan says the delays in game launches, particularly in China, were temporary and linked to regulatory challenges. With the Chinese government’s restrictions on game releases now lifted, he believes the company is well positioned to capitalise on the recovery of the gaming industry.
To access a broader pool of investors, Winking Studios has also been listed on the London Stock Exchange’s (LSE) Alternative Investment Market (AIM). The London listing serves strategic business objectives. “We believe that listing on AIM will allow us to build stronger relationships with European gaming companies and position ourselves as a leading player in the region,” says Jan. The counter’s IPO in London was at 15 pence per share. As of Jan 14, its shares on LSE AIM are trading at GBP0.2065 ($0.34).
Even though Winking Studios is in growth mode, it announced in October 2024 plans to adopt a “conservative” annual dividend policy that will pay out around 5% to 15% of its annual distributable profits. “In establishing the group’s proposed dividend policy, the board aims to maximise total shareholder return, which it feels can be achieved in the short to medium term through primarily focusing on business growth,” the company adds.
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Winking Studios says it is actively pursuing M&A opportunities to strengthen its value proposition across the global gaming services value chain, offering “cost-effective solutions” to its Western and Asian clients across various market segments.
SAC Capital remains positive about Winking Studios’ growth prospects, which are driven by a strong acquisition pipeline bolstered by funds raised through the recent placement and the anticipated advantages of the dual listing. In its unrated report on Jan 15, SAC Capital highlights three key investment theses: inorganic growth as a primary driver; the London listing providing access to a wider investor base; and Acer as a parent company, offering enhanced operational capabilities and an expanded industry network.
