In Brief: Playside Studios, CSL & Lifestyle Communities

This story features PLAYSIDE STUDIOS LIMITED, and other companies.
For more info SHARE ANALYSIS: PLY

This week’s In Brief focuses on two stocks with robust upside potential as the adverse news cycle passes with CSL’s US flu vaccine sales signaling resilience.

-After a challenging strategic reset in FY25, Playside’s new offerings look set to boost earnings
-Initial channel checks infer CSL’s 2025/26 flu vaccine sales are holding up
-Residents took on Lifestyle Communities and have won a favourable VCAT decision

By Danielle Ecuyer

This week’s quote comes from Beth Kindig, I/O Fund

“Boston Consulting Group forecasts global data centre power demand to rise at a 16% compound average growth rate (CAGR) from 2023 to 2028, accelerating from a 12% CAGR. Hyperscalers are projected to account for 60% of this demand growth.

“Within the forecast, generative AI power demand is estimated to rise at a 65% CAGR, with AI training increasing at 30% CAGR and inference rising at a rapid 122% CAGR. By 2028, Boston Consulting Group estimates Gen AI will account for more than one-third of global data centre power demand.”

Is PlaySide Studios receiving a Mouse boost?

As suffering shareholders might be all too aware of, PlaySide Studios’ ((PLY)) share price has fallen to around 18c currently from 80c in August 2024 following a deterioration in financial performance and management’s downgrade to the FY25 outlook.

The game developer reported a -21% year-on-year revenue fall and swung to an earnings (EBITDA) loss of -$2.8m in the first half, driven by a -44% slump in Original IP revenue and the absence of a major licensing deal.

Management cut full-year revenue guidance and warned of further cash burn, projecting reserves could fall to as low as $10m by June.

In better news, as highlighted by Canaccord Genuity, the company has announced Mouse: P.I. for Hire, the first major title to be released in its Original IP pipeline, has achieved 1m wishlists on the Steam platform. This ranks it as the 24th most wishlisted title globally, with management anticipating Mouse will be a “major revenue driver for the studio in FY26”.

Wishlists are viewed as a reliable indicator for intent to purchase, with management aiming for 1.4m-1.5m wishlists towards the end of 2025.

Canaccord estimates around $20m in revenue based on 1m wishlists and around a $30-$50 unit price. The studio also has the upcoming release of PlaySide’s Dumb Ways to Die multi-console title in 2H26/1H27 and Game of Thrones: War for Westeros in 1H27. Canaccord is talking about the most robust pipeline of original intellectual property ever. Mouse will be released ahead of these two.

If FY25 was a re-basing year for investor expectations, the recent 18% lift in the share price indicates improving sentiment around the release of Mouse and the strong pipeline.

With management having completed its restructuring process, including cost out of -$4m to -$5m and a reduction in headcount to 265 from 360 at the peak, the company is poised to generate positive free cash flow due to a lower cost cash burn. Canaccord forecasts free cash flow to rise to $2m in 1H26 from -$19m in 2H25.

The stock is rated Buy with a 50c target price.

Outlook for CSL’s flu vaccine

With ongoing uncertainty over US tariffs on pharmaceuticals and scant details announced thus far, Jarden suggests management is unlikely to provide solid guidance at CSL’s ((CSL)) upcoming FY25 earnings report release.

Orders for the FY26 flu season are rolling in and while CSL has cautioned the market on the outlook for vaccine division Seqirus, due to US vaccine policy and a trend away from vaccinations, latest channel checks with a vaccine distributor who accounts for around 15% of flu vaccines in the US market pointed to around a 10% lift in Seqirus forward orders for the 2025/26 flu season, with Sanofi at around 5% and GlaxoSmithKline at 3%, although the distributor has won more accounts and raised its market share.

Jarden views Seqirus as picking up market share, with Sanofi losing share due to disruption and the loss of sales representatives.

On balance, Jarden expects flu vaccine volumes will be flat in 2025/26 despite higher infection rates in 2024/25, with indications becoming more apparent in October/November.

The analyst has tweaked EPS estimates lower by -0.1% for FY25 and -3% for FY26 on the back of lower avian flu sales, reservation fees, and Biomedical Advanced Research and Development Authority (BARDA) contracts.
The broker’s target slips -1.4% to $313.12 with an Overweight rating retained.

FNArena daily monitored brokers have a consensus target price of $321.74 with seven Buy or equivalent ratings.

Lifestyle Communities in the unwanted limelight

Retirement living is big business with a bulging “ageing” demographic looking for appropriate downsized accommodation. Lifestyle Communities ((LIC)) was for several years a favourite company for many until a media report into resident concerns questioning the transparency over the company’s deferred management fee model of up to 20% of a home’s sale price on exiting resulted in 80 residents lodging complaints with VCAT (Victorian Civil and Administrative Tribunal), alleging the DMF structure violated consumer protection laws.

The share price has fallen to levels around $4.66 from $13 in August 2024 on this week’s VCAT decision the company has the right to charge an exit fee in its contracts, but the existing contracts are void as they do not state the monetary amount at the time of purchase.

Moelis stresses VCAT’s decision was a “material downside surprise” against expectations, with management seeking to appeal the judgement.

Lifestyle Communities will be amending its DMF contracts for new sales to a maximum of the entry price of the house, and existing homeowners will continue with the existing licences until orders from VCAT are forthcoming.

Moelis estimates the DMF represents around $1.50 of estimated net tangible asset at $7.12.

A revised trading update was also announced for 4Q24, with new home settlements at 268 against the analyst’s previous forecast of 250, which is viewed as robust into fiscal year end.

Sales were also noted as improving into the FY25 end but came in below the replacement rate. Moelis estimates around 250 deposits on hand into FY26.

After adjusting earnings forecasts lower by -25% in FY26 and -32.2% in FY27, the FY25 forecast was lifted by 27.8%. The target price has been lowered to $7.90 from $11.60, the Buy rating remains in place (the share price is trading a sizeable gap lower).

FNArena daily monitored brokers have a consensus target price of $7.04, down -$2.01 post the announcement, with two rating downgrades to Hold-equivalent from Buy, alongside one Hold and one remaining Buy rating from UBS.

Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Click to view our Glossary of Financial Terms