Intralot (ASE: INLOT)

Last close As at 04/03/2024

EUR1.23

−0.02 (−1.60%)

Market capitalisation

EUR706m

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.

Latest Insights

Consumer | edison tv

Intralot – executive interview

Sector

Consumer

Equity Analyst

Russell Pointon

Russell Pointon

Director, Consumer

Key Management

  • Andreas Chrysos

    CFO

  • Antonis Skiadas

    Group Finance Director

  • Chris Sfatos

    Group Deputy CEO

Balance Sheet

Forecast net debt (€m)

333.6

Forecast gearing ratio (%)

748

Share Price Performance

Price Performance
% 1M 3M 12M
Actual 7.9 32.8 87.9
Relative 3.6 18.9 49.0
52 week high/low €1.2/€0.6

Financials

Intralot Integrated Lottery Systems and Services (Intralot) is a leading developer and supplier of integrated gaming systems and services that cover the entire value chain of select gaming markets. Its core global markets are forecast to produce steady growth, which is likely to be further boosted by new revenue opportunities as adjacent markets regulate and/or open up. The industry enjoys high barriers to entry and the long-term nature of client relationships provides attractive financial dynamics such as high revenue visibility and levels of profitability. Management believes the company’s competitive advantages of superior technology and service will provide many opportunities to outpace market growth in the next few years, which will further drive profitability, cash generation and returns. We believe these are not reflected in the current valuation.

Y/E Dec Revenue (€m) EBITDA (€m) PBT (€m) EPS (fd) (c) P/E (x) P/CF (x)
2021A 335.3 110.4 26.0 11.42 10.9 1.8
2022A 343.9 122.9 16.3 (0.91) N/A 2.9
2023E 357.9 133.1 29.3 0.57 219.3 5.4
2024E 366.4 142.9 45.1 1.25 100.0 6.9

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