Intralot (ASE: INLOT)

Last close As at 20/06/2024

EUR1.09

−0.01 (−0.91%)

Market capitalisation

EUR659m

Intralot is a leading gaming technology and services provider with 52 live contracts across 39 countries.

Equity proposition

Intralot has an integrated offering covering lottery, betting, interactive gaming and ancillary services. This enables Intralot to service clients across the gaming ecosystem, from government authorities to private operators, as well as operating its own gaming licence. With proprietary technology powering activities and driving innovation, Intralot is well-positioned to capitalise on the major growth opportunities in regulated gaming markets globally.

There are five key strengths underpinning the Intralot investment case.

  1. Intralot enjoys long-term contracts, typically up to 10 years although many contracts are extended further, with a current weighted average term of 15 years. This provides revenue visibility and supports strategic planning and the management of profitability and cash flow.
  2. Intralot has built geographic diversification across 39 countries, with 52 live contracts. This mitigates reliance on any single market.
  3. Since 2008, Intralot has delivered an impressive 89% contract renewal rate, demonstrating the stickiness of its customer relationships and the strength of its solutions. High barriers to entry, such as regulation and the cost to build platforms, and switching costs help secure contract renewals over the long term. Intralot’s next-generation technology provides flexible, scalable and secure software for retail and online environments. These enable best-of-breed strategies, fast configuration of new content and cloud-ready technologies for clients.
  4. Intralot is focused on regulated gaming markets globally, which provide clarity to the gaming operators on market structure and the rules of engagement with retail customers. The global gaming markets are estimated to grow at a 4.5% revenue CAGR over 2022 to 2028. There are opportunities in the US as 12 state lottery contracts (that are not currently clients of Intralot) open for bidding over the next three years. These could provide a meaningful boost to Intralot’s growth, if successful in the bidding. Furthermore, the opening of more US states as they regulate could provide a tailwind for Intralot’s services.
  5. Intralot has undergone an operational restructuring, delivering substantially improved profitability. Over the past three years, EBITDA has shown double-digit growth while margins have expanded from 12.2% in 2019 to an expected 36% in 2023, demonstrating the success of strategic initiatives.

With its integrated offering, global footprint, long-term contracts, next-generation technology, growth exposure and improved margins, Intralot represents a compelling investment case in the regulated global gaming industry.

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Sector

Consumer

Equity Analyst

Russell Pointon

Russell Pointon

Director of Content, Consumer and Media

Key Management

  • Andreas Chrysos

    CFO

  • Chrysostomos Sfatos

    Deputy CEO

  • Nikolaos Nikolakopoulos

    CEO

  • Sokratis Kokkalis

    Chairman

Balance Sheet

Forecast net debt (€m)

301.7

Forecast gearing ratio (%)

566

Share Price Performance

Price Performance
% 1M 3M 12M
Actual (8.1) (6.0) 82.7
Relative (4.0) (7.5) 62.5
52 week high/low €1.2/€0.6

Financials

Intralot reported good underlying revenue growth in Q124, offset by broad-based unfavourable foreign exchange translation effects and some phasing. Our estimates are unchanged following the results. The company also announced the appointment of Nikolaos Nikolakopoulos as CEO. Mr Nikolakopoulos, who remains as CEO of the US subsidiary, Intralot Inc, takes the role from the incumbent chairman, Sokratis Kokkalis. The US is a key market for the company’s future growth aspirations, with plenty of opportunities to gain share in the next few years.

Y/E Dec Revenue (€m) EBITDA (€m) PBT (€m) EPS (fd) (c) P/E (x) P/CF (x)
2022A 343.9 122.9 16.3 (0.89) N/A 2.6
2023A 348.6 129.5 26.1 0.67 162.7 4.5
2024E 354.0 138.1 47.7 1.85 58.9 6.0
2025E 378.9 151.5 70.2 4.07 26.8 5.0

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