CentralNic Group - Sustained growth, benign outlook

CentralNic has continued to trade strongly, both during lockdown and afterwards. Benefiting from its FY20 investment programme, the company delivered 9% organic growth in FY20, 16% in Q121 and now 25% organic growth in Q221, with contributions from all business lines. As a result, management expects to deliver revenue for the year ‘well ahead’ of market expectations, with profits ‘in line’ with consensus. As investment normalises, management expects future periods (we interpret this to mean FY22 and beyond) to benefit from increasing operational leverage. CentralNic’s shares trade on an undemanding FY21e EV/adjusted EBITDA of 9.9x and P/E of 13.5x, which does not appear to reflect the growth the group delivered over lockdown in FY20 or its future prospects. We intend to review our estimates with the H121 results due on 31 August 2021.