Equity Research - 08 August 2018 09:09 CET

THQ Nordic Reason: Preview of results pressures margins

 Q2 report due 15 August  More acquisitions to come

 Stock trading at ’19e adj. EV/EBIT of 18.6x Share price (SEK) 07/08/2018 1 8 7 .2

Technology Hardware & Equipment, Sweden Seasonally softer quarter THQNb.ST/THQNb.ST Q2 is the first full quarter after the acquisition of Koch Media; we forecast group sales of SEK 680m and EBIT of SEK 71.4m. Due to some MCap (SEKm) 16,502 seasonality with a less intensive release window within the games MCap (EURm) 1,596.7 market, the second quarter of the year is usually not the strongest. Net debt (EURm) -155 Moreover, with no major releases during the quarter for either THQ and , we anticipate softer Q2 figures. The seasonality applies for No. of shares (m) 88.2 Partner Publishing as well, and now that an expected larger share of Free float (%) 44.0 revenues for the quarter is coming from Koch Media, which has a higher Av. daily volume (k) 315.5 amount of fixed overhead costs, the lower sales should lead to lower operating margins. Next event Q2 report: 15 Aug Minor acquisition after Q2 Performance As THQ announced earlier in July, 3 now has given the official release date of 27 November, although sales from the game have 800 700 already been factored into account in our estimates. Together with the 600 Deep Silver AAA-title Exodus, which will be released in Q1’19, 500 THQ is set to again see stronger figures in the upcoming winter. As has 400 historically been the case, we expect a majority of this year’s profits to 300 200 occur in Q4. 100 0

Furthermore, at the start of Q3, THQ announced the acquisition of

Jul 17 Jul

Jul 18 Jul

Jan 17 Jan

Jan 18 Jan

Mar 17 Mar

Mar 18 Mar

Nov 16 Nov

Sep 17 Sep

Nov 17 Nov

May 17 May May 18 May HandyGames for an initial payment of EUR 1m. The German company THQ Nordic OMX STH PI will operate as a publisher for small and mid-sized projects, 1m 3m 12m complementing the setup for the rest of the group. However, the German Absolute (%) 1.7 22.2 217.3 and publisher remains a smaller acquisition, and OMX STH PI (%) 6.0 2.6 5.3 with the share issuing THQ did earlier in June with proceeds amounting Source: FactSet to SEK 1,448m, we believe that more acquisitions are yet to come.

Current valuation The stock is currently trading at adj. EV/EBIT of 18.6x and P/E of 27.1x for 2019e.

Lead analyst: Stefan Knutsson Erik Moberg Victor Forssell

SEKm 2016 2017 2018e 2019e 2020e 2018e 2019e 2020e Sales 302 508 3,683 4,480 4,860 P/E (x) 35.4 27.1 24.1 EBITDA 132 273 1,114 1,427 1,584 P/E adj (x) 35.4 27.1 24.1 EBITDA margin (%) 43.8 53.7 30.2 31.9 32.6 P/BVPS (x) 5.08 4.28 3.63 EBIT adj 95 188 612 804 901 EV/EBITDA (x) 13.6 10.5 9.3 EBIT adj margin (%) 31.5 37.1 16.6 17.9 18.5 EV/EBIT adj (x) 24.7 18.6 16.4 Pretax profit 93 182 592 780 877 EV/sales (x) 4.10 3.34 3.04 EPS rep 1.00 1.76 5.29 6.90 7.76 ROE adj (%) 21.6 17.1 16.3 EPS adj 1.00 1.76 5.29 6.90 7.76 Dividend yield (%) 0 0 0 Sales growth (%) 41.8 68.1 625.7 21.6 8.5 FCF yield (%) 0.1 0.9 1.2 EPS growth (%) 17.0 75.8 201.0 30.5 12.5 Net IB debt/EBITDA -1.4 -1.2 -1.2 Source: ABG Sundal Collier, Company data

Please refer to important disclosures at the end of this report

THQ Nordic

Opportunities Risks A large part of the IP portfolio is still not generating any Despite THQ Nordic’s broad portfolio, there are risks income, but the pipeline of game launches is strong, associated with larger title releases as they have a including a few AAA titles. Together with a strong relatively large impact on sales right after launch. management with a clear M&A agenda, THQ is well suited Moreover, disappointing releases or reviews could dent for future value-adding acquisitions, which could mean end-customer enthusiasm and hurt the company's securing more IPs and portfolio expansion. The acquisition finances, especially during the launch period. Delays in of Koch Media further adds new distribution/publishing planned and ongoing gaming projects could adversely channels, an opportunity to reach further and wider with affect the group’s profitability. Acquiring established but the current portfolio and expected pipeline, aligning them temporarily underperforming gaming brands and gradually for additional growth. improving them increases the potential risk of performing below market expectations.

Sales split Q1, (%) Business area breakdown, sales Q1, SEKm

70 300

60 250

50 200

40 150 30 100 20 50 10 0 0 THQ Nordic Deep Silver Partner Owned titles Publishing titles Publishing/Film

Sales Sales

Source: ABG Sundal Collier, Company data Source: ABG Sundal Collier, Company data EPS estimate changes, 2018e, SEK EPS estimate changes, 2019e, SEK

6.5 8.0

6.0 7.5 7.0 5.5 6.5 5.0 6.0 4.5 5.5

4.0 5.0 4.5 3.5 4.0 3.0 3.5 2.5 3.0

ABGSC FactSet Consensus Mean ABGSC FactSet Consensus Mean Source: ABG Sundal Collier, FactSet Source: ABG Sundal Collier, FactSet Quarterly sales and adj. EBIT, SEKm Company description THQ Nordic acquires, develops and publishes PC and 1,600 350 console games for the global gaming market. Its core 1,400 300 business model consists of acquiring established gaming 1,200 250 brands and gradually improving them. Much of THQ’s soul 1,000 stems from entrepreneur, founder and CEO Lars 200 Wingefors, who at the age of 16 founded Nordic Games, 800 150 which we today associate with THQ Nordic. The game 600 changer came in 2013 when most of today’s brand 100 400 portfolio was acquired from THQ Inc’s insolvency. At the 200 50 start of 2018, the company acquired Koch Media, which focuses on game development and gives THQ a larger 0 0 publishing business. quarterly sales quarterly adj. EBIT Source: ABG Sundal Collier, Company data

8 August 2018 ABG Sundal Collier 2

THQ Nordic

Quarterly and yearly overview P/L SEKm Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18e Q3'18e Q4'18e 2015 2016 2017 2018e 2019e 2020e Net Sales 82 86 85 255 633 680 890 1480 213 302 508 3683 4480 4860 COGS -25 -24 -30 -69 -320 -375 -476 -740 -70 -119 -148 -1911 -2262 -2430 Gross profit 71 78 71 222 405 393 540 885 156 228 442 2223 2761 3016 Operating costs -29 -38 -37 -65 -179 -233 -305 -392 -51 -96 -169 -1109 -1334 -1432 D&A -10 -9 -11 -54 -119 -88 -116 -178 -38 -37 -84 -501 -623 -683 EBIT 32 30 24 102 107 71 119 314 67 95 188 612 804 901 Net financials 0 0 -1 -5 -9 -4 -3 -5 -1 -2 -6 -21 -24 -24 EBT 31 30 23 97 98 68 116 309 66 93 182 592 780 877 Taxes -8 -7 -4 -24 -17 -15 -26 -68 -14 -21 -43 -126 -172 -193 Net result 24 23 19 73 81 53 91 241 51 72 139 466 608 684

Revenue grow th Q/Q -36% 4% -1% 202% 148% 7% 31% 66% Revenue grow th Y/Y 90% 62% 9% 99% 673% 695% 951% 479% 20% 42% 68% 626% 22% 8%

Gross margin 70% 72% 65% 73% 49% 45% 47% 50% 67% 61% 71% 48% 50% 50% EBIT margin 39% 35% 28% 40% 17% 11% 13% 21% 31% 31% 37% 17% 18% 19% Net margin 29% 27% 22% 29% 13% 8% 10% 16% 24% 24% 27% 13% 14% 14%

Source: ABG Sundal Collier, company data

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THQ Nordic

Income Statement (SEKm) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018e Q3 2018e Q4 2018e Sales 82 86 85 255 633 680 890 1,480 COGS -25 -24 -30 -69 -320 -375 -476 -740 Gross profit 57 61 55 186 313 305 414 740 Other operating items -15 -22 -20 -30 -87 -145 -179 -247 EBITDA 42 40 35 156 226 160 235 493 Depreciation on tangibles 0 0 0 0 0 0 0 0 Depreciation on intangibles -10 -9 -11 -54 -119 -88 -116 -178 EBITA 32 30 24 102 107 71 119 314 Goodwill impairment charges 0 0 0 0 0 0 0 0 Other impairment and amortisation 0 0 0 0 0 0 0 0 EBIT 32 30 24 102 107 71 119 314 Interest Net -0 -0 -1 -5 -9 -4 -3 -5 Other financial items 0 0 0 0 0 0 0 0 Associated income 0 0 0 0 0 0 0 0 Other EO items 0 0 0 0 0 0 0 0 Pretax profit 31 30 23 97 98 68 116 309 Tax -8 -7 -4 -24 -17 -15 -26 -68 Net profit 24 23 19 73 81 53 91 241 Minority interest 0 0 0 0 0 0 0 0 Net profit discontinued 0 0 0 0 0 0 0 0 Net profit to shareholders 24 23 19 73 81 53 91 241 EPS 0.33 0.32 0.24 0.93 1.02 0.60 1.03 2.74 EPS Adj 0.33 0.32 0.24 0.93 1.02 0.60 1.03 2.74 Total extraordinary items after tax 0 0 0 0 0 0 0 0 Tax rate (%) 25.3 22.6 18.8 24.4 17.3 22.0 22.0 22.0 Gross margin (%) 70.1 71.6 64.9 72.9 49.5 44.9 46.5 50.0 EBITDA margin (%) 51.2 46.4 40.8 61.2 35.7 23.5 26.4 33.3 EBITA margin (%) 38.9 35.5 28.4 39.9 16.9 10.5 13.4 21.2 EBIT margin (%) 38.9 35.5 28.4 39.9 16.9 10.5 13.4 21.2 Pretax margin (%) 38.4 35.1 27.7 38.0 15.5 10.0 13.1 20.9 Net margin (%) 28.7 27.1 22.5 28.7 12.8 7.8 10.2 16.3 Growth rates Y/Y Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018e Q3 2018e Q4 2018e Sales growth (%) 89.9 62.2 8.8 99.3 672.8 694.8 951.2 479.5 EBITDA growth (%) 81.8 71.2 36.4 157.4 439.0 302.5 580.4 214.9 EBIT growth (%) 124.2 113.3 50.3 101.5 236.6 135.4 397.5 208.2 Net profit growth (%) 119.7 119.5 50.1 93.2 244.4 127.7 377.8 228.7 EPS growth (%) 119.7 119.5 50.1 93.2 244.4 127.7 377.8 228.7 Adj earnings numbers Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018e Q3 2018e Q4 2018e EBITDA Adj 42 40 35 156 226 160 235 493 EBITDA Adj margin (%) 51.2 46.4 40.8 61.2 35.7 23.5 26.4 33.3 EBITA Adj 32 30 24 102 107 71 119 314 EBITA Adj margin (%) 38.9 35.5 28.4 39.9 16.9 10.5 13.4 21.2 EBIT Adj 32 30 24 102 107 71 119 314 EBIT Adj margin (%) 38.9 35.5 28.4 39.9 16.9 10.5 13.4 21.2 Pretax profit Adj 31 30 23 97 98 68 116 309 Net profit Adj 24 23 19 73 81 53 91 241 Net profit to shareholders Adj 24 23 19 73 81 53 91 241 Net Adj margin (%) 28.7 27.1 22.5 28.7 12.8 7.8 10.2 16.3 Source: ABG Sundal Collier, Company data

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THQ Nordic

Income Statement (SEKm) na na na 2014 2015 2016 2017 2018e 2019e 2020e Sales na na na 178 213 302 508 3,683 4,480 4,860 COGS na na na -58 -70 -119 -148 -1,911 -2,262 -2,430 Gross profit na na na 121 143 183 360 1,772 2,218 2,430 Other operating items na na na -25 -38 -51 -87 -658 -790 -846 EBITDA na na na 95 105 132 273 1,114 1,427 1,584 Depreciation on tangibles na na na 0 0 0 0 0 0 0 Depreciation on intangibles na na na -27 -38 -37 -84 -501 -623 -683 EBITA na na na 68 67 95 188 612 804 901 Goodwill impairment charges na na na 0 0 0 0 0 0 0 Other impairment and amortisation na na na 0 0 0 0 0 0 0 EBIT na na na 68 67 95 188 612 804 901 Interest Net na na na -1 -1 -2 -6 -21 -24 -24 Other financial items na na na 0 0 0 0 0 0 0 Associated income na na na 0 0 0 0 0 0 0 Other EO items na na na 0 0 0 0 0 0 0 Pretax profit na na na 67 66 93 182 592 780 877 Tax na na na -15 -14 -21 -43 -126 -172 -193 Net profit na na na 52 52 72 139 466 608 684 Minority interest na na na 0 -1 0 0 0 0 0 Net profit discontinued na na na 0 0 0 0 0 0 0 Net profit to shareholders na na na 52 51 72 139 466 608 684 EPS na na na 0.87 0.85 1.00 1.76 5.29 6.90 7.76 EPS Adj na na na 0.87 0.85 1.00 1.76 5.29 6.90 7.76 Total extraordinary items after tax na na na 0 0 0 0 0 0 0 Tax rate (%) na na na 22.4 21.6 22.6 23.5 21.2 22.0 22.0 Gross margin (%) na na na 67.7 67.1 60.6 70.9 48.1 49.5 50.0 EBITDA margin (%) na na na 53.5 49.4 43.8 53.7 30.2 31.9 32.6 EBITA margin (%) na na na 38.3 31.3 31.5 37.1 16.6 17.9 18.5 EBIT margin (%) na na na 38.3 31.3 31.5 37.1 16.6 17.9 18.5 Pretax margin (%) na na na 37.7 31.0 30.8 35.9 16.1 17.4 18.0 Net margin (%) na na na 29.3 24.3 23.8 27.4 12.7 13.6 14.1 Growth rates Y/Y na na na 2014 2015 2016 2017 2018e 2019e 2020e Sales growth (%) na na na na 19.6 41.8 68.1 625.7 21.6 8.5 EBITDA growth (%) na na na na 10.4 26.0 106.0 308.5 28.2 11.0 EBIT growth (%) na na na na -2.3 42.7 98.1 225.4 31.3 12.1 Net profit growth (%) na na na na -0.7 39.1 93.4 234.9 30.5 12.5 EPS growth (%) na na na na -1.7 17.0 75.8 201.0 30.5 12.5 Profitability na na na 2014 2015 2016 2017 2018e 2019e 2020e ROE (%) na na na na 71.7 33.5 19.6 21.6 17.1 16.3 ROE Adj (%) na na na na 71.7 33.5 19.6 21.6 17.1 16.3 ROCE (%) na na na na 122.4 74.5 55.9 57.0 42.4 38.1 ROCE Adj(%) na na na na 122.4 74.5 55.9 57.0 42.4 38.1 ROIC (%) na na na na 96.0 57.7 42.7 44.9 33.1 29.7 ROIC Adj (%) na na na na 96.0 57.7 42.7 44.9 33.1 29.7 Adj earnings numbers na na na 2014 2015 2016 2017 2018e 2019e 2020e EBITDA Adj na na na 95 105 132 273 1,114 1,427 1,584 EBITDA Adj margin (%) na na na 53.5 49.4 43.8 53.7 30.2 31.9 32.6 EBITA Adj na na na 68 67 95 188 612 804 901 EBITA Adj margin (%) na na na 38.3 31.3 31.5 37.1 16.6 17.9 18.5 EBIT Adj na na na 68 67 95 188 612 804 901 EBIT Adj margin (%) na na na 38.3 31.3 31.5 37.1 16.6 17.9 18.5 Pretax profit Adj na na na 67 66 93 182 592 780 877 Net profit Adj na na na 52 52 72 139 466 608 684 Net profit to shareholders Adj na na na 52 51 72 139 466 608 684 Net Adj margin (%) na na na 29.3 24.3 23.8 27.4 12.7 13.6 14.1 Source: ABG Sundal Collier, Company data

8 August 2018 ABG Sundal Collier 5

THQ Nordic

Cash Flow Statement (SEKm) na na na 2014 2015 2016 2017 2018e 2019e 2020e EBITDA na na na 95 105 132 273 1,114 1,427 1,584 Net financial items na na na -1 -1 -2 -6 -21 -24 -24 Paid tax na na na -15 -14 -21 -43 -126 -172 -193 Non-cash items na na na -52 13 -13 -96 -193 0 0 Cash flow before change in WC na na na 27 103 96 128 774 1,231 1,367 Change in WC na na na na 7 3 51 645 -68 -16 Operating cash flow na na na 60 110 99 179 1,420 1,163 1,351 CAPEX tangible fixed assets na na na 0 0 0 0 0 0 0 CAPEX intangible fixed assets na na na -39 -69 -160 -708 -1,405 -1,013 -1,154 Acquisitions and disposals na na na 0 0 0 0 0 0 0 Free cash flow na na na 22 41 -60 -529 15 150 197 Dividend paid na na na 0 0 0 0 0 0 0 Share issues and buybacks na na na 0 0 0 0 0 0 0 Other non cash items na na na na -39 199 962 979 0 0 Decrease in net IB debt na na na na 2 138 432 994 150 197 Balance Sheet (SEKm) na na na 2014 2015 2016 2017 2018e 2019e 2020e Goodwill na na na 0 0 0 0 0 0 0 Indefinite intangible assets na na na 0 0 0 0 0 0 0 Definite intangible assets na na na 75 104 229 571 2,372 2,762 3,234 Tangible fixed assets na na na 1 2 4 8 33 33 33 Other fixed assets na na na 3 0 0 3 195 195 195 Fixed assets na na na 79 106 232 582 2,601 2,991 3,462 Inventories na na na 0 0 0 0 0 0 0 Receivables na na na 35 44 65 120 1,184 1,344 1,458 Other current assets na na na 0 0 0 0 0 0 0 Cash and liquid assets na na na 18 26 167 627 1,790 1,940 2,136 Total assets na na na 131 175 465 1,329 5,574 6,275 7,057 Shareholders equity na na na 59 84 345 1,073 3,248 3,856 4,540 Minority na na na 0 0 0 0 0 0 0 Total equity na na na 59 84 345 1,073 3,248 3,856 4,540 Long-term debt na na na 5 8 11 41 403 403 403 Pension debt na na na 0 0 0 0 0 0 0 Convertible debt na na na 0 0 0 0 0 0 0 Deferred tax na na na 0 0 0 0 0 0 0 Other long-term liabilities na na na 0 0 0 0 0 0 0 Short-term debt na na na 0 0 0 0 0 0 0 Accounts payable na na na 68 84 108 215 1,924 2,016 2,114 Other current liabilities na na na 0 0 0 0 0 0 0 Total liabilities and equity na na na 131 175 465 1,329 5,574 6,275 7,057 Net IB debt na na na -16 -18 -156 -589 -1,582 -1,732 -1,929 Net IB debt excl. pension debt na na na -16 -18 -156 -589 -1,582 -1,732 -1,929 Capital invested na na na 43 66 189 485 1,666 2,124 2,611 Working capital na na na -33 -40 -43 -95 -740 -672 -656 EV breakdown na na na 2014 2015 2016 2017 2018e 2019e 2020e Market cap. diluted (m) na na na na na 2,391 6,279 16,502 16,502 16,502 Net IB debt Adj na na na -13 -18 -156 -586 -1,387 -1,537 -1,734 Market value of minority na na na 0 0 0 0 0 0 0 Reversal of shares and participations na na na 0 0 0 0 0 0 0 Reversal of conv. debt assumed equity na na na 0 0 0 0 0 0 0 EV na na na na na 2,235 5,694 15,115 14,965 14,768 Capital efficiency (%) na na na 2014 2015 2016 2017 2018e 2019e 2020e Total assets turnover (%) na na na na 138.9 94.3 56.6 106.7 75.6 72.9 Capital invested turnover (%) na na na na 391.4 236.7 150.7 342.5 236.5 205.3 Capital employed turnover (%) na na na na 391.4 236.7 150.7 342.5 236.5 205.3 Inventories/sales (%) na na na na 0 0 0 0 0 0 Customer advances/sales (%) na na na na 0 0 0 0 0 0 Payables/sales (%) na na na na 35.6 31.8 31.8 29.0 44.0 42.5 Working capital/sales (%) na na na na -17.2 -13.8 -13.6 -11.3 -15.8 -13.7 Financial risk and debt service na na na 2014 2015 2016 2017 2018e 2019e 2020e Net debt/equity (%) na na na -27.4 -21.4 -45.3 -54.8 -48.7 -44.9 -42.5 Net debt/market cap (%) na na na na na -7.3 -12.9 -9.6 -10.5 -11.7 Equity ratio (%) na na na 44.8 48.0 74.2 80.8 58.3 61.5 64.3 Net IB debt adj./equity (%) na na na -22.3 -21.4 -45.2 -54.6 -42.7 -39.9 -38.2 Current ratio (%) na na na 77.3 82.6 214.5 347.7 154.5 162.9 170.0 EBITDA/net interest (%) na na na 9,520.0 17,716.7 6,246.8 4,405.6 5,335.3 5,908.1 6,557.3 Net IB debt/EBITDA (%) na na na -16.9 -17.2 -118.0 -215.9 -142.1 -121.4 -121.8 Interest cover (%) na na na 6,810.0 11,225.3 4,484.0 3,041.4 2,934.6 3,328.3 3,730.5 Source: ABG Sundal Collier, Company data

8 August 2018 ABG Sundal Collier 6

THQ Nordic

Valuation and Ratios (SEKm) na na na 2014 2015 2016 2017 2018e 2019e 2020e Shares outstanding adj. na na na 60 60 72 79 88 88 88 Fully diluted shares Adj na na na 60 60 72 79 88 88 88 EPS na na na 0.87 0.85 1.00 1.76 5.29 6.90 7.76 Dividend per share Adj na na na 0 0 0 0 0 0 0 EPS Adj na na na 0.87 0.85 1.00 1.76 5.29 6.90 7.76 BVPS na na na 0.98 1.40 4.79 13.54 36.84 43.74 51.50 BVPS Adj na na na -0.27 -0.34 1.62 6.34 9.93 12.41 14.82 Net IB debt / share na na na -0.3 -0.3 -2.2 -7.4 -17.9 -19.7 -21.9 Share price na na na na na 33.20 79.25 187.20 187.20 187.20 Market cap. (m) na na na na na 2,391 6,279 16,502 16,502 16,502 Valuation na na na 2014 2015 2016 2017 2018e 2019e 2020e P/E na na na na na 33.2 45.1 35.4 27.1 24.1 EV/sales na na na na na 7.41 11.22 4.10 3.34 3.04 EV/EBITDA na na na na na 16.9 20.9 13.6 10.5 9.3 EV/EBITA na na na na na 23.5 30.3 24.7 18.6 16.4 EV/EBIT na na na na na 23.5 30.3 24.7 18.6 16.4 Dividend yield (%) na na na na na 0 0 0 0 0 FCF yield (%) na na na na na -2.5 -8.4 0.1 0.9 1.2 P/BVPS na na na na na 6.93 5.85 5.08 4.28 3.63 P/BVPS Adj na na na na na 20.55 12.50 18.85 15.09 12.63 P/E Adj na na na na na 33.2 45.1 35.4 27.1 24.1 EV/EBITDA Adj na na na na na 16.9 20.9 13.6 10.5 9.3 EV/EBITA Adj na na na na na 23.5 30.3 24.7 18.6 16.4 EV/EBIT Adj na na na na na 23.5 30.3 24.7 18.6 16.4 EV/cap. employed na na na na na 11.8 11.7 9.1 7.0 5.7 Investment ratios na na na 2014 2015 2016 2017 2018e 2019e 2020e Capex/sales na na na 21.9 32.2 52.9 139.6 38.1 22.6 23.7 Capex/depreciation na na na 143.5 178.0 427.6 839.2 280.4 162.6 169.0 Capex tangibles/tangible fixed assets na na na 0 0 0 0 0 0 0 Capex intangibles/definite intangibles na na na 52.0 65.6 69.8 124.0 59.2 36.7 35.7 Depreciation on intangibles/definite intangibles na na na 36.2 36.8 16.3 14.8 21.1 22.6 21.1 Depreciation on tangibles/tangibles na na na 0 0 0 0 0 0 0 Source: ABG Sundal Collier, Company data

8 August 2018 ABG Sundal Collier 7

THQTHQ Nordic Nordic

Analyst certification I/We, Erik Moberg, Stefan Knutsson, Victor Forssell, the author(s) of this report, certify that not withstanding the existence of any such potential conflicts of interests referred to below, the views expressed in this report accurately reflect my/our personal view about the companies and securities covered in this report.

Analyst valuation methods ABG Sundal Collier analysts may publish valuation ranges for stocks covered under Company Sponsored Research. These valuation ranges rely on various valuation methods. One of the most frequently used methods is the valuation of a company by calculation of that company's discounted cash flow (DCF). Another valuation method is the analysis of a company's return on capital employed relative to its cost of capital. Finally, the analysts may analyse various valuation multiples (e.g. the P/E multiples and the EV/EBITDA multiples) relative to global industry peers. In special cases, particularly for property companies and investment companies, the ratio of price to net asset value is considered. Valuation ranges may be changed when earnings and cash flow forecasts are changed. They may also be changed when the underlying value of a company's assets changes (in the cases of investment companies, property companies or insurance companies) or when factors impacting the required rate of return change.

Important Company Specific Disclosure ssss The following disclosures relate to the relationship between ABG Sundal Collier and its affiliates and the companies covered by ABG Sundal Collier referred to in this research report.

Unless disclosed in this section, ABG Sundal Collier has no required regulatory disclosures to make in relation to an ownership position for the analyst(s) and members of the analyst's household, ownership by ABG Sundal Collier, ownership in ABG Sundal Collier by the company(ies) to whom the report(s) refer(s) to, market making, managed or co-managed public offerings, compensation for provision of certain services, directorship of the analyst, or a member of the analyst's household, or in relation to any contractual obligations to the issuance of this research report.

ABG Sundal Collier has undertaken a contractual obligation to issue this report and receives predetermined compensation from the company covered in this report. w mo

mo

ABG Sundal Collier is not aware of any other actual, material conflicts of interest of the analyst or ABG Sundal Collier of which the analyst knows or has reason to know at the time of the publication of this report.

Production of report: 08/08/2018 09:10 CET. All prices are as of market close on 07 August, 2018 unless otherwise noted.

Disclaimer This document has been prepared by ABG Sundal Collier which is the marketing name referring to all or any of ABG Sundal Collier ASA, ABG Sundal Collier AB or ABG Sundal Collier Partners LLP and any of their affiliated or associated companies and their directors, officers, representatives and employees.

This research product is commissioned and paid for by the company covered in this report. As such, this report is deemed to constitute an acceptable minor non-monetary benefit (i.e. not investment research) as defined in MiFID II.

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This research report does not, and does not attempt to contain everything material that there is to be said about THQ Nordic.

The compensation of our research analysts is determined exclusively by research management and senior management, but not including investment banking management. Compensation is not based on specific investment banking revenues, however, it is determined from the profitability of the ABG Sundal Collier Group, which includes earnings from investment banking operations and other business. Investors should assume that ABG Sundal Collier is seeking or will seek investment banking or other business relationships with the companies in this report. The research analyst(s) responsible for the preparation of this report may interact with trading desk and sales personnel and other departments for the purpose of gathering, synthesizing and interpreting market information. From time to time, ABG Sundal Collier and its affiliates and any shareholders, directors, officers or employees thereof may (I) have a position in, or otherwise be interested in, any securities directly or indirectly connected to the subject of this report, or (II) perform investment banking or other services for, or solicit investment banking or other services from, a company mentioned in this report. ABG Sundal Collier relies on information barriers to control the flow of information contained in one or more areas of ABG Sundal Collier, into other areas, units, groups or affiliates of ABG Sundal Collier.

Norway: ABG Sundal Collier ASA is regulated by the Financial Supervisory Authority of Norway (Finanstilsynet); Sweden: ABG Sundal Collier AB is regulated by the Swedish Financial Supervisory Authority (Finansinspektionen); UK: This report is a communication made, or approved for communication in the UK, by ABG Sundal Collier Partners LLP, authorised and regulated by the Financial Conduct Authority in the conduct of its business. US: This report is being distributed in the United States in accordance with FINRA Rule 1050(f)(3)(B) by ABG Sundal Collier Inc., a FINRA member which accepts responsibility for its content. Research analysts are not registered/qualified as research analysts with FINRA or the NYSE, and are not associated persons of ABG Sundal Collier Inc. and therefore not subject to FINRA Rule 2241, the research analyst conflict rules. Research reports distributed in the U.S are intended solely for “major institutional investors”, as defined under Rule 15a-6 of the Securities Exchange Act of 1934. Each U.S major institutional investor that receives a copy of this research report by its acceptance represents that it agrees it will not distribute this research report to any other person. Any U.S. major institutional investor receiving this report who wishes to effect

8 August 2018 ABG Sundal Collier 8

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transactions in any securities referred to herein should contact ABG Sundal Collier Inc., not its affiliates. Further information on the securities referred to herein may be obtained from ABG Sundal Collier Inc., on request.

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ABGSC Research Department

Joint Global Head of Research John Olaisen +47 22 01 61 87 Christer Linde +46 8 566 286 90

Head of Introduce /Company-sponsored research

Arash Hakimi Fard +46 8 566 286 35

Strategy Metals & Mining Christer Linde, Quant/Technical +46 8 566 286 90 Martin Melbye +47 22 01 61 37 Derek Laliberte +46 8 566 286 78 Bengt Jonassen +47 22 01 60 98 Bengt Jonassen +47 22 01 60 98 Petter Nyström +47 22 01 61 35

Capital Goods Oil & Gas Anders Idborg +46 8 566 286 74 John Olaisen +47 22 01 61 87 Olof Cederholm +46 8 566 286 22 Karl Fredrik Schjøtt-Pedersen +47 22 01 61 65 Karl Bokvist +46 8 566 286 33 Oil Service Chemicals John Olaisen +47 22 01 61 87 Martin Melbye +47 22 01 61 37 Haakon Amundsen +47 22 01 60 25 Bengt Jonassen +47 22 01 60 98 Lukas Daul +47 22 01 61 39 Petter Nyström +47 22 01 61 35 Karl Fredrik Schjøtt-Pedersen +47 22 01 61 65 Glenn Kringhaug +47 22 01 61 62 Online Gaming Construction & Real Estate Aksel Øverland Engebakken +47 22 01 61 11 Tobias Kaj +46 8 566 286 21 Erik Moberg +46 8 566 286 87 Bengt Jonassen +47 22 01 60 98 Stefan Knutsson +46 8 566 286 37 Philip Hallberg +46 8 566 286 95 Glenn Kringhaug +47 22 01 61 62 Pulp & Paper Laurits Louis Kjaergaard +45 35 46 30 12 Martin Melbye +47 22 01 61 37 Glenn Kringhaug +47 22 01 61 62 Consumer Goods Øystein Elton Lodgaard +47 22 01 60 26 Andreas Lundberg +46 8 566 286 51

Petter Nyström +47 22 01 61 35 Renewable Energy Michael Vitfell-Rasmussen +45 35 46 30 16 Casper Blom +45 35 46 30 15 Ludvig Kapanen +46 8 566 286 91 Petter Nyström +47 22 01 61 35

Credit Research Retail Alexander Jost +47 22 01 60 88 Andreas Lundberg +46 8 566 286 51 Rikard Magnus Braaten +47 22 01 60 86 Ludvig Kapanen +46 8 566 286 91 Andreas Johannessen +47 22 01 60 31 Haakon Amundsen +47 22 01 60 25 Seafood Eric Wahlström +46 8 566 286 25 Vidar Strat +47 22 01 61 60

Financials Services Magnus Andersson +46 8 566 294 69 Andreas Lundberg +46 8 566 286 51 Mads Thinggaard +45 35 46 30 18 Michael Vitfell-Rasmussen +45 35 46 30 16 Patrik Brattelius +46 8 566 286 64 Victor Forssell +46 8 566 286 92 Jan Erik Gjerland +47 22 01 61 16 Jonas Bru Lien +47 22 01 61 71 Shipping & Transport Dennis Anghelopoulos +47 22 01 60 37 Food & Beverages Casper Blom +45 35 46 30 15 Michael Vitfell-Rasmussen +45 35 46 30 16 Lukas Daul +47 22 01 61 39

Healthcare Telecom Operators Morten Larsen +45 35 46 30 19 Peter Kurt Nielsen +44 207 905 5631 Sten Gustafsson +46 8 566 286 93 Christopher W. Uhde +46 8 566 286 39 Utilities Daniel Thorsson +46 8 566 286 82 Martin Melbye +47 22 01 61 37 Andrew Carlsen +45 35 46 30 13 Petter Nyström +47 22 01 61 35 Glenn Kringhaug +47 22 01 61 62 Small Caps lnvestment Companies Andrew Carlsen +45 35 46 30 13 Derek Laliberte +46 8 566 286 78 Arash Hakimi Fard +46 8 566 286 35

Emmi Östlund +46 8 566 286 73 IT Daniel Thorsson +46 8 566 286 82 Aksel Øverland Engebakken +47 22 01 61 11 Johan Nilsson Wall +46 8 566 286 41 Daniel Thorsson +46 8 566 286 82 Laurits Louis Kjaergaard +45 35 46 30 12 Andrew Carlsen +45 35 46 30 13 Simon Granath +46 8 566 286 32

Media Aksel Øverland Engebakken +47 22 01 61 11 Derek Laliberte +46 8 566 286 78 Andreas Lundberg +46 8 566 286 51

Norway Sweden Denmark United Kingdom USA Germany Singapore Pb. 1444 Vika Box 7269 Forbindelsesvej 12, 10 Paternoster Row, 5th fl 850 Third Avenue, Suite 9-C Schillerstrasse 2, 5. OG 10 Collyer Quay NO-0115 OSLO SE-103 89 STOCKHOLM DK-2100 COPENHAGEN LONDON EC4M 7EJ NEW YORK, NY 10022 DE-60313 FRANKFURT Ocean Financial Center Norway Sweden Denmark UK USA Germany #40-07, Singapore 049315 Tel: +47 22 01 60 00 Tel: +46 8 566 286 00 Tel: +45 35 46 61 00 Tel: +44 20 7905 5600 Tel. +1 212 605 3800 Tel +49 69 96 86 96 0 Tel +65 6808 6082 Fax: +47 22 01 60 60 Fax: +46 8 566 286 01 Fax: +45 35 46 61 10 Fax: +44 20 7905 5601 Fax. +1 212 605 3801 Fax +49 69 96 86 96 99

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