bet-at-home - A cautious tone ahead of German regulation

bet-at-home (BAH) is an established European online sports betting and e-gaming provider. It largely operates in unregulated grey markets that are characterised by strong cash flow, although they also carry commensurately higher regulatory risks. Upcoming legislation in Germany will provide clarity but will likely result in responsible gambling restrictions and potentially higher taxes. FY19 results were above our estimates but management has guided to a more conservative outlook for FY20 and we now forecast a revenue decline of 10.7% in FY20. The FY19 dividend is more modest than previous years (€2 vs our €4), as BAH is clearly being prudent in view of regulatory uncertainties. BAH trades at 7.4x EV/EBITDA, 12.3x P/E for FY20, with a 7.0% dividend yield.