Leading International Investment Research, Edison Investment Research

Edison Investment Research

Leading International Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

Equity Bottom-Up

OPAP is Europe’s only listed gaming operator with 100% pre-paid exclusive retail licences, providing substantial barriers to entry. Margin expansion and high cash flow have been achieved through product enhancements and successful cost controls, while maintaining strong CSR credentials. COVID-19 presents a significant near-term disruption and our forecasts include a total loss of €400m of gross gaming revenues in FY20. Despite the weaker outlook for retail spending, the company has a robust balance sheet and net debt/EBITDA should fall below 1.0x in FY21. We expect OPAP to continue its dividend policy of paying out the bulk of free cash flow and we estimate an FY21 dividend yield of 9.9%.

OPAP is Europe’s only listed gaming operator with 100% pre-paid exclusive retail licences, providing substantial barriers to entry. Margin expansion and high cash flow have been achieved through product enhancements and successful cost controls, while maintaining strong CSR credentials. COVID-19 presents a significant near-term disruption and our forecasts include a total loss of €400m of gross gaming revenues in FY20. Despite the weaker outlook for retail spending, the company has a robust balance sheet and net debt/EBITDA should fall below 1.0x in FY21. We expect OPAP to continue its dividend policy of paying out the bulk of free cash flow and we estimate an FY21 dividend yield of 9.9%.

OPAP - Responsible gaming with high cash flow

FY19 results were in line demonstrating a strong underlying business, but these have been overshadowed by the impact of COVID-19 on FY20. Management estimates that the disruption (shop closures) will have an impact on monthly gross gaming revenues (GGR) of €130–140m and EBITDA of €50–53m. Our new forecasts assume a €400m revenue loss equivalent to three months of full disruption during FY20 and we also have reduced FY21 GGR forecasts by 9% to reflect the potential impact on consumer confidence. Nonetheless, the balance sheet remains robust and we forecast a final dividend for FY20 (payable in FY21). The shares trade at 6.8x EV/EBITDA and 12.7x P/E for FY21 with an 11.8% yield.

FY19 results were in line demonstrating a strong underlying business, but these have been overshadowed by the impact of COVID-19 on FY20. Management estimates that the disruption (shop closures) will have an impact on monthly gross gaming revenues (GGR) of €130–140m and EBITDA of €50–53m. Our new forecasts assume a €400m revenue loss equivalent to three months of full disruption during FY20 and we also have reduced FY21 GGR forecasts by 9% to reflect the potential impact on consumer confidence. Nonetheless, the balance sheet remains robust and we forecast a final dividend for FY20 (payable in FY21). The shares trade at 6.8x EV/EBITDA and 12.7x P/E for FY21 with an 11.8% yield.

OPAP - Well capitalised to weather COVID-19

OPAP’s Q319 results saw similar trends to H119 and were in line with our estimates. Gross gaming revenues (GGR) increased 6.7% to €393.6m, driven by a 43.2% increase in video lottery terminals (VLT) GGR and a stronger lottery performance. Alongside revenue growth, OPAP is successfully containing costs, which led to a 25.8% EBITDA margin and a 24.5% increase in net profit. OPAP has announced that it will pay an extraordinary dividend in Q120 (rather than an interim dividend) – on our estimates this equates to an 11.9% dividend yield for FY19. For FY20, OPAP trades at 8.6x EV/EBITDA and 15.2x P/E with an 8.9% dividend yield.

OPAP’s Q319 results saw similar trends to H119 and were in line with our estimates. Gross gaming revenues (GGR) increased 6.7% to €393.6m, driven by a 43.2% increase in video lottery terminals (VLT) GGR and a stronger lottery performance. Alongside revenue growth, OPAP is successfully containing costs, which led to a 25.8% EBITDA margin and a 24.5% increase in net profit. OPAP has announced that it will pay an extraordinary dividend in Q120 (rather than an interim dividend) – on our estimates this equates to an 11.9% dividend yield for FY19. For FY20, OPAP trades at 8.6x EV/EBITDA and 15.2x P/E with an 8.9% dividend yield.

OPAP - Surprising extraordinary dividend for Q120

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

MSCI Emerging Markets Index / Technical Analysis

Asia and the BRIC segment continue to outperform the broad EM universe. Based on technical breakouts in each of their relative strength trends (vs. MSCI EM), we see these trends continuing well into 2018.  Elsewhere, Russia is on the cusp of a breakout. The Philippines is breaking out. And Korea, a market that broke out earlier this year from a 6-year base, is a buy on weakness.  Today’s report includes a complete summary of our EM views as well as a wide variety of bottom-up recommendations, spanning most sectors and all market capitalizations.

Asia and the BRIC segment continue to outperform the broad EM universe. Based on technical breakouts in each of their relative strength trends (vs. MSCI EM), we see these trends continuing well into 2018.  Elsewhere, Russia is on the cusp of a breakout. The Philippines is breaking out. And Korea, a market that broke out earlier this year from a 6-year base, is a buy on weakness.  Today’s report includes a complete summary of our EM views as well as a wide variety of bottom-up recommendations, spanning most sectors and all market capitalizations.

EM Outlook: Bullish, Led by BRIC and Asia

Greece

OPAP SA accepts bets on sporting events and lottery games.  The Company organizes and manages bets on soccer games.

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OPAP SA (OPAP GA)

OPAP - Responsible gaming with high cash flow

OPAP is Europe’s only listed gaming operator with 100% pre-paid exclusive retail licences, providing substantial barriers to entry. Margin...

Edison Investment Research

OPAP - Well capitalised to weather COVID-19

FY19 results were in line demonstrating a strong underlying business, but these have been overshadowed by the impact of COVID-19 on FY20....

Edison Investment Research

OPAP - Surprising extraordinary dividend for Q120

OPAP’s Q319 results saw similar trends to H119 and were in line with our estimates. Gross gaming revenues (GGR) increased 6.7% to €393.6m, driven...

Edison Investment Research

EM Outlook: Bullish, Led by BRIC and Asia

Asia and the BRIC segment continue to outperform the broad EM universe. Based on technical breakouts in each of their relative strength trends (vs....

Vermilion Research

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