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Codere

SP: CDR

€344.4m market cap

€2.91 last close

Codere is an international gaming company that manages c 57,000 gaming machines, 30,000 bingo seats and 7,600 sports betting terminals across Latin America, Spain and Italy. It was founded in 1980, listed in 2007 and completed a successful debt for equity swap in 2016.

Investment summary

Q319 results were dominated by previously announced accounting irregularities in the Mexico, Panama and Colombia divisions. These have been confirmed as one off and confined to H119 but, as a direct result, management has lowered FY19 EBITDA guidance by c €10m to €250–255m (pre-IFRS 16). As a positive, the Spanish division is developing strongly, with encouraging momentum in online. Codere’s focus is now on refinancing the senior notes and rebuilding trust with the investment community. We have lowered our FY19 EBITDA by 8.7% and our FY20 EBITDA by 8.0%. The stock is very illiquid and trades at 4.2x EV/EBITDA for FY20e, which is at a deep discount to peers.

Y/E Dec
Revenue (€m)
EBITDA (€m)
PBT (€m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2017A 1638.2 273.5 96.2 0.7 415.0 N/A
2018A 1476.4 282.9 101.7 47.7 6.1 N/A
2019E 1406.7 321.8 23.7 (18.7) N/A N/A
2020E 1443.9 338.8 38.0 (9.2) N/A N/A
Industry outlook

Codere’s key markets are Mexico, Argentina, Italy and Spain and c 80% of EBITDA is from Latin America. Codere is heavily exposed to currency and emerging market risk, which specifically includes Argentina FX risk.

Last updated on 21/11/2019
Sector
TMT
Share price graph
Balance sheet
Forecast net debt (€m) 1081.8
Forecast gearing ratio (%) 3082
Price performance
%
1m
3m
12m
Actual (9.8) (13.8) (4.8)
Relative* (7.9) (18.6) (7.4)
52-week high/low €4.4/€2.9
*% relative to local index
Key management
Angel Corzo Uceda CFO
Guillermo Lancha Head of IR