Asetek (ASTK) Investor Update summary

Company Overview and Business Segments

• Operates two main segments: liquid cooling for gaming PCs (primarily OEM, B2B2C) and SimSports (B2C and B2B2C, branded sim racing equipment).

• Over 11 million liquid cooling units sold, with 2024 LC revenue expected between $42–44 million and SimSports at $10–11 million.

• SimSports business focuses on direct-to-consumer and retail channels, emphasizing brand building and modular, upgradable products.

• Recently secured an Xbox license, opening access to a larger market segment, with plans to expand to PlayStation.

• Both segments share resources, engineering, and management, leveraging synergies and overlapping customer bases.

Market Trends and Strategic Positioning

• Gaming market is expanding, driven by technological advancements, increased connectivity, and a 4.4% CAGR in gaming revenue from 2024 to 2027.

• Liquid cooling remains focused on premium and mid-level markets, adapting to shifts in consumer spending and OEM demand.

• SimSports is expanding from premium to mid-level segments, offering modular products compatible with other brands to lower entry barriers.

• Gaming simulation market is growing, driven by new game titles and consumer willingness to invest in high-quality equipment.

• Plans to leverage established brand in sim racing to enter adjacent simulation categories like farming and trucking.

Financial Performance and Guidance

• 2024 revenue guidance: USD 52–55m, with group revenue expected to decline 28–32% from 2023, mainly due to lower LC orders.

• Adjusted EBITDA margin guidance for 2024 is 1–4%.

• Delivered 6% annual revenue CAGR and 12% average EBITDA over the past eight years, with recent volatility due to market conditions and investments in SimSports.

• Medium-term ambitions: $50 million revenue for both liquid cooling and SimSports, with LC EBITDA margin at 25%+ and SimSports aiming for positive single-digit margin as revenue exceeds $50m.

• Recent cash flow turned negative in 2024 after prior strong performance, prompting the current rights issue to fund SimSports growth and working capital.