Flexion Mobile: Time to Feel Enthusiastic

Flexion recently announced an accelerated book-building procedure in a planned targeted rights issue of SEK 90 million to Swedish and international institutions. If the rights issue is completed successfully, Flexion’s largest channel/client will subscribe to additional shares for approximately SEK 30 million. Huawei recently became the company’s largest channel, which means it is obvious that the “corner” investor in the transition (if successful) is Huawei. Redeye is optimistic about Flexion’s prospects with a base case 35% above the closing price today, December 3.

With a new commercial partnership agreement with Huawei (also announced this evening) and Huawei as a significant potential shareholder in Flexion, our conviction recently increased even more.

Huwaei is one of the largest tech companies and has many incentives to strengthen its market position in the western world especially through mobile software and services, and Flexion is a good partner in this mission we believe. In the new commercial agreement with Huawei which the first period expires at the end of 2023, the two parties will collaborate in-game sourcing, development, promotions, and marketing to successfully maintain games in Huawei’s AppGallery. With an increased collaboration, revenues from Huawei’s App Gallery will likely continue to outgrow the other channels in Flexion’s game portfolio we estimate.

Flexion has already a great ownership structure according to Redeye’s rating model, with founders, the CEO, and Chairman owning almost 40% of total shares today. Adding institutional owners and one of the tech giants as a strategic partner the ownership will be perfect according to us.

We will most likely increase our base case if this directed share issue is successful.

Original Post: Redeye