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 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%.