Really enjoyed this article and I learned a bit about new PM Burnham who I don’t know much about. I like the Standard Chartered pick, it’s a really great company and has a large presence in emerging/frontier markets specifically Africa. Investors are starting to realize that the UK is still a safe place to bet on, and it’s now offering attractive discounts while Gilts offer attractive yields. In a time where previously “safe” havens are seen as more risky, I agree UK is low risk and higher reward than ever.
The distinction between UK-listed and UK-economy exposure is doing a lot of work here. The rerating case is strongest when the discount is tested against businesses with comparable sector mix, margins, growth and geographic revenues—not the S&P 500 as a whole. The M&A and buyback data help because they point to an actual mechanism for narrowing the gap.
Structurally higher-margin, cash-backed digital-IP publisher entering its most catalyst-rich release window. The physical-distribution exit held FY25 revenue flat at £166m, but lifted gross margin by 440 bps to 46% and adjusted EBITDA by 11.3% to £48.5m - evidence that the earnings model has already improved before the H2 FY26 release slate arrives.
A 440-bp gross-margin expansion has already translated into 11.3% EBITDA growth despite flat reported revenue. The long works if that structural mix benefit combines with even modest H2 top-line execution; a 5% incremental revenue increase can translate into approximately 21% operating-profit growth on the leaner post-restructuring cost base. Both Chairman and CEO have skin in the game.
#1. There is meaningful operating leverage into H2. First-party digital releases - including Hell Let Loose Vietnam and Bus Simulator 27- carry materially lower royalty and physical-distribution costs; royalties have already fallen from 29.9% of sales in FY24 to 28.6% in FY25.
#2. The company has 75% of revenue in a diversified back catalogue of over 140 active titles, £51.9m of net cash, and H2 launch upside. That makes this less dependent on any one release than the market narrative suggests.
#3. Capitalized development spend rose to £33.2m in FY25 from £25.0m, taking the capitalized-development asset to £61.4m. That is real cash investment, but it is financing owned IP ahead of launches - not simply recurring opex inflation - and FY25 operating cash conversion remained 89%.
Catalyst sequence: H1 results on 15 September should demonstrate gross margin above 46% and validate cash conversion; H2 launch data determines revenue upside; FY26 results in March 2027 are the main EBITDA and cash-flow recognition point. The trade is to own the stock ahead of the Q4 FY26 / March 2027 recognition window: September validates the margin reset, Q4 delivers the launch-driven operating leverage, and March turns the thesis into reported EBITDA and cash-flow evidence
Group chief executive Mikkel Weider commented: “Selling more than one million copies on day one is a truly fantastic achievement by Bulkhead and Team17.” Stock is up ~+23%.
Massive 🇬🇧
Lets go!
Really enjoyed this article and I learned a bit about new PM Burnham who I don’t know much about. I like the Standard Chartered pick, it’s a really great company and has a large presence in emerging/frontier markets specifically Africa. Investors are starting to realize that the UK is still a safe place to bet on, and it’s now offering attractive discounts while Gilts offer attractive yields. In a time where previously “safe” havens are seen as more risky, I agree UK is low risk and higher reward than ever.
Thanks a lot!
Only after substantial gains— when assets are far more expensive—does courage return.
Thank you.
The distinction between UK-listed and UK-economy exposure is doing a lot of work here. The rerating case is strongest when the discount is tested against businesses with comparable sector mix, margins, growth and geographic revenues—not the S&P 500 as a whole. The M&A and buyback data help because they point to an actual mechanism for narrowing the gap.
True!
***Long EVPL***
Structurally higher-margin, cash-backed digital-IP publisher entering its most catalyst-rich release window. The physical-distribution exit held FY25 revenue flat at £166m, but lifted gross margin by 440 bps to 46% and adjusted EBITDA by 11.3% to £48.5m - evidence that the earnings model has already improved before the H2 FY26 release slate arrives.
A 440-bp gross-margin expansion has already translated into 11.3% EBITDA growth despite flat reported revenue. The long works if that structural mix benefit combines with even modest H2 top-line execution; a 5% incremental revenue increase can translate into approximately 21% operating-profit growth on the leaner post-restructuring cost base. Both Chairman and CEO have skin in the game.
#1. There is meaningful operating leverage into H2. First-party digital releases - including Hell Let Loose Vietnam and Bus Simulator 27- carry materially lower royalty and physical-distribution costs; royalties have already fallen from 29.9% of sales in FY24 to 28.6% in FY25.
#2. The company has 75% of revenue in a diversified back catalogue of over 140 active titles, £51.9m of net cash, and H2 launch upside. That makes this less dependent on any one release than the market narrative suggests.
#3. Capitalized development spend rose to £33.2m in FY25 from £25.0m, taking the capitalized-development asset to £61.4m. That is real cash investment, but it is financing owned IP ahead of launches - not simply recurring opex inflation - and FY25 operating cash conversion remained 89%.
Catalyst sequence: H1 results on 15 September should demonstrate gross margin above 46% and validate cash conversion; H2 launch data determines revenue upside; FY26 results in March 2027 are the main EBITDA and cash-flow recognition point. The trade is to own the stock ahead of the Q4 FY26 / March 2027 recognition window: September validates the margin reset, Q4 delivers the launch-driven operating leverage, and March turns the thesis into reported EBITDA and cash-flow evidence
Happy hunting!
Thank you for the insights bro!
Group chief executive Mikkel Weider commented: “Selling more than one million copies on day one is a truly fantastic achievement by Bulkhead and Team17.” Stock is up ~+23%.