The Investment Column: Game on for float

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The Independent Online
GAME, the computer games retailer that is coming to the stock market next month, has timed its flotation well. Its debut will be buoyed by the terrific run of Electronics Boutique, the only directly comparable quoted company, whose shares have tripled in the last year. Both companies have been growing rapidly and this is likely to result in Game's shares being priced at a premium to the retail sector, valuing Game at pounds 120m- pounds 140m.

Game has larger stores than its main rival, though fewer of them. However, it has ambitious plans to increase its portfolio from the current 61 to around 120 in the medium term.

Game sells console hardware from the likes of Sony, Sega and Nintendo as well as software and other accessories.

Its approach seems to be working. The company's pathfinder prospectus yesterday forecasts pre-tax profits of pounds 7.1m in the year to 3 May compared with just pounds 400,000 in the previous year. Sales are forecast to have jumped from pounds 52.3m to pounds 77.6m.

With 13 per cent of the UK entertainment software market, which is growing fast on the back of expanding PC sales, the company is well placed to grow further.

This is expected to be reflected in the company's rating, which is likely to be at a premium to the retail sector average of 17. Given that the float is a placing with institutions and there is no intermediaries offer, much will depend not just on the pricing but the shares' performance on the first day of dealings. Even so, they are worth a look.

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