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Games Workshop shares hit record high after blockbuster half-year

The maker of Warhammer figurines declared a dividend of 45p per share, taking its total payout for the half year to 100p compared to 68p for the same period in 2018

Games Workshop Group PLC - Games Workshop declares record half-year profit as dividend surges

Warhammer owner Games Workshop PLC (LON:GAW) saw its shares hit a record high on Tuesday as it delivered a bumper set of half-year figures alongside a large hike in its dividend.

For the six months ended 1 December, the maker of fantasy wargaming figurines reported a pre-tax profit of £57.1mln, up from £40.8mln in the prior year, while revenues jumped to £148.4mln from £125.2mln.

READ: Games Workshop expects to report higher first-half sales and profits

The revenue boost was mostly attributed to the firm’s trade division, which grew 27% and added around 200 trade outlets to its roster.

As a result of the record half-year, the company declared a dividend on Tuesday of 45p per share, taking its total payout for the period to 100p compared to 65p in 2018.

Trading for December has also been in line with expectations.

"Our business and the Warhammer Hobby continue to be in great shape. We are pleased to once again report record sales and profit levels in the period. The global team have worked their socks off to deliver these great results”, said Games Workshop chief executive Kevin Rountree.

The blockbuster results sent the shares surging 6% to 6,755p in mid-afternoon trading.

House broker hikes target price

Analysts at the company’s house broker Peel Hunt hiked their target price for the firm to 7,000p from 5,000p in the wake of the results and retained their ‘buy’ rating, saying it was “not surprising” that the shares were performing strongly given the company’s performance and high returns.

The broker added that there was “still a lot to look forward to” including new product launches in the summer and the development of a TV series based on the company’s Eisenhorn series of novels set in the Warhammer 40k universe.

“Nerdy types” and a cornered market key factors in success

Neil Wilson, chief market analyst at Markets.com, says that the secret behind the company’s success comprised three key factors, one of which was the fact that “nerdy types” who had grown up with the company were now earning “real money and have stuck with the brand”.

He added that the “no one else” was really targeting the same market as Games Workshop (fantasy wargaming figurines), and as such it has a captive customer base it can continue to squeeze.

The company was also able to keep costs "dialled down" and was now reaping the rewards.

Company has “winning formula” but TV aspirations “high risk move”, says analyst

AJ Bell’s investment director Russ Mould said Games Workshop had hit upon a “winning formula” with its carving out of a niche market and “excelling at good old fashioned customer engagement”.

“You can see that in its numbers; revenue, profit and dividends continue to rise at pace and so does the share price”, Mould said.

However, he cautioned that the group’s attempted move into TV with Eisenhorn series was “arguably a risky move”.

“Plenty of popular novels haven’t translated well to the small screen, either because of poor scripts or they simply didn’t come across in the same way that people interpreted and visualised the story in their head. There is also the risk that many viewers don’t understand the plot without knowledge of the original novels”, Mould said.

However, he concluded that it is “unlikely” the firm will approve “any old production just in the pursuit of additional income”.

“In its defence, the business does seem careful about everything it does”, Mould said.

--Adds analyst comment and updates share price--

Quick facts: Games Workshop Group PLC

Price: 6825 GBX

LSE:GAW
Market: LSE
Market Cap: £2.23 billion
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RNS

Half-year Report

1 week, 4 days ago

Director/PDMR Shareholding

2 weeks, 2 days ago

Notice of Results

on 23/12/19

Holding(s) in Company

on 11/12/19

Total Voting Rights

on 2/12/19

Dividend Declaration

on 19/11/19

Trading Statement

on 8/11/19

3 min read