JPJ Group plc

LN: JPJ

£535.2m market cap

720p last close

JPJ Group plc is a leading online gaming operator mainly focused on bingo-led gaming targeted towards female audiences. At September 2018, 56% of revenues were generated in the UK.

Investment summary

JPJ has announced a definitive agreement to sell its Mandalay subsidiary to 888 Holdings for £18m cash. During FY18, Mandalay reported revenues of c £11m and PBT of c £3.7m, which represents a deal value of c 5.0x EV/EBITDA. This subsidiary has significantly underperformed the rest of JPJ’s business and was particularly affected by the additional bonus tax in 2017. We therefore believe this asset sale is a net positive and should enable the company to better focus on its market-leading brands. The stock continues to trade at the low end of the peer group, at only 8.7x EV/EBITDA, 7.2x P/E and 11.9% free cash flow yield for FY19e.

Y/E Dec
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2016A 269.0 102.2 83.5 112.6 6.4 6.1
2017A 304.7 108.6 78.2 103.9 6.9 5.2
2018E 317.9 108.8 88.9 114.0 6.3 5.2
2019E 318.6 95.6 81.1 100.6 7.2 6.0
Last updated on 19/02/2019
Industry outlook

In the UK, the government has raised the remote gaming duty from 15% to 21%, with implementation from April 2019. We estimate that this will reduce Group EBITDA by £12m.

Last updated on 19/02/2019
Sector
Consumer
Share price graph
Balance sheet
Forecast net debt (£m) 282.7
Forecast gearing ratio (%) 116
Price performance
%
1m
3m
12m
Actual 11.8 18.0 (8.3)
Relative* 8.3 14.8 (6.9)
52-week high/low 1036.0p/590.0p
*% relative to local index
Key management
Neil Goulden Chairman
Keith Laslop CFO