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Anticipating improving performance through FY20

bet-at-home 5 May 2020 Update
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bet-at-home

Anticipating improving performance through FY20

Q120 results

Travel and leisure

5 May 2020

Price

€38.1

Market cap

€267m

€:£0.88

Net cash (€m) at 31 March 2020 (excl client money)

48.7

Shares in issue

7.0m

Free float

46.7%

Code

ACXX

Primary exchange

XETR

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

38.0

(21.9)

(48.7)

Rel (local)

25.6

(0.9)

(39.1)

52-week high/low

€72.2

€18.3

Business description

Founded in 1999, bet-at-home is an online sports betting and gaming company with c 300 employees. It is licensed in Malta and headquartered in Dusseldorf, Germany. Since 2009 bet-at-home has been part of Betclic Everest, a privately owned French online gaming company.

Next events

Q220 results

4 August 2020

Q320 results

9 November 2020

Analysts

Russell Pointon

+44 (0)20 3077 5757

Sara Welford

+44 (0)20 3077 5700

bet-at-home is a research client of Edison Investment Research Limited

Given the recent loss of revenue from Switzerland and the tough comparative of Q119, growth in Q120 was expected to be negative. The outbreak of COVID-19 and subsequent cancellation of many sporting events compounded the forecast negative growth rate. Comparatives become easier as the year progresses and management has acted quickly to reduce unnecessary costs, so the company’s guidance for FY20 has been reiterated. Our forecasts remain broadly unchanged. The prospective yield of 6.3%, which is well supported by cash, continues to look attractive.

Year end

Revenue (GGR**) (€m)

EBITDA
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/18

143.4

36.2

4.65

6.50

8.2

17.1

12/19

143.3

35.2

4.26

2.00

9.0

5.2

12/20e

127.9

26.1

2.79

2.40

13.7

6.3

12/21e

130.4

26.5

2.83

2.88

13.5

7.6

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **GGR: gross gaming revenue.

Weak Q1 as expected

Against the quarter with the most difficult comparative of FY19, gross gaming revenue (GGR) fell 13.4% to €32.2m, net gaming revenue fell 17.9% to €25.5m and EBITDA fell 28.8% to €9.0m. GGR for sports (17% of group total) fell 8.4% y-o-y given the comparative (+8.1%) and the cancellation of sporting events from mid-March due to COVID-19. GGR for gaming (83% of group) fell 16.8% y-o-y but excluding the well-flagged revenue losses in Poland and Switzerland, underlying revenue was broadly flat. From a cost perspective, management acted quickly to reduce marketing (given the postponement of UEFA Euro 2020 and other events) and other costs, but personnel costs increased 6%, leading to the EBITDA margin falling from 34% in Q119 to 28% in Q120. An improvement in the number of registered users to 5.3m from 5.22m at end of FY19 indicates the health of the brand remains strong.

Guidance reiterated for FY20

Management has reiterated FY20 guidance of GGR of €120–132m and EBITDA of €23–27m. These represent declines for revenue of 8–16% and for EBITDA of 23–35% versus FY19. For FY20, comparatives become easier for sports from Q2 and the gradual re-commencing of sporting events post lockdowns are likely to lead to better growth than in Q120. For gaming, the comparatives become easier from the end of Q3, when the loss of revenues from Switzerland annualises. We increase our assumption for staff cost inflation but reduce other costs, leading to a broadly unchanged EBITDA forecast of €26.1m versus guidance of €23–27m.

Valuation: 6.3% prospective dividend yield

bet-at-home trades at 8.4x EV/EBITDA and 13.7x P/E for FY20e, which remains towards the top end of industry peers. The net cash position of c €49m versus the market capitalisation of €267m, means that the 6.3% prospective dividend yield is attractive. In our view, evidence of positive regulation changes in the core market of Germany and a recovery in sports would be a positive catalyst for the share price.

Exhibit 1: Financial summary

€m

2016

2017

2018

2019

2020e

2021e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

138.7

145.4

143.4

143.3

127.9

130.4

Cost of Sales

(25.8)

(27.6)

(28.2)

(25.8)

(23.6)

(24.1)

Net Gaming Revenue

112.9

117.8

115.1

117.5

104.3

106.4

EBITDA

 

 

33.0

36.4

36.2

35.2

26.1

26.5

Operating Profit (before amort. and except.)

 

31.9

35.1

34.9

33.2

24.1

24.5

Amortisation of acquired intangibles

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

(0.9)

0.0

0.0

0.0

0.0

Share-based payments

0.0

0.0

0.0

0.0

0.0

0.0

Reported operating profit

31.9

34.1

34.9

33.2

24.1

24.5

Net Interest

2.2

1.5

0.0

(0.1)

(0.1)

(0.1)

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

34.1

36.6

35.0

33.1

24.0

24.3

Profit Before Tax (reported)

 

 

34.1

35.7

35.0

33.1

24.0

24.3

Reported tax

(3.1)

(2.8)

(2.4)

(15.1)

(4.4)

(4.5)

Profit After Tax (norm)

31.0

33.8

32.6

29.9

19.6

19.8

Profit After Tax (reported)

31.0

32.8

32.6

18.0

19.6

19.8

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

Discontinued operations

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

31.0

33.8

32.6

29.9

19.6

19.8

Net income (reported)

31.0

32.8

32.6

18.0

19.6

19.8

Average Number of Shares Outstanding (m)

7.0

7.0

7.0

7.0

7.0

7.0

EPS - normalised fully diluted (c)

 

 

441.58

481.22

464.67

425.52

278.66

282.54

EPS - diluted normalised (€)

 

 

4.42

4.81

4.65

4.26

2.79

2.83

EPS - basic reported (€)

 

 

4.42

4.68

4.65

2.56

2.79

2.83

Dividend per share (c)

750.00

750.00

650.00

200.00

240.00

288.00

Revenue growth (%)

14.0

4.8

(-1.4)

(-0.0)

(-10.8)

2.0

Gross Margin (%)

81.4

81.0

80.3

82.0

81.6

81.6

EBITDA Margin (%)

23.8

25.0

25.3

24.5

20.4

20.3

Normalised Operating Margin

23.0

24.1

24.4

23.2

18.9

18.8

BALANCE SHEET

Fixed Assets

 

 

4.9

4.0

3.4

8.2

7.5

6.5

Intangible Assets

2.0

2.0

2.0

2.3

2.8

3.0

Tangible Assets

2.9

2.0

1.4

5.9

4.7

3.5

Investments & other

0.0

0.0

0.0

0.0

0.0

0.0

Current Assets

 

 

140.5

120.6

99.9

87.0

96.9

101.9

Stocks

0.0

0.0

0.0

0.0

0.0

0.0

Debtors

47.9

16.9

20.1

30.4

33.4

36.4

Cash & cash equivalents

82.3

94.4

70.6

47.4

54.3

56.3

Customer cash

9.5

7.5

7.7

7.4

7.4

7.4

Other

0.7

1.8

1.5

1.9

1.9

1.9

Current Liabilities

 

 

(35.1)

(35.3)

(34.0)

(50.9)

(51.9)

(52.9)

Creditors

(0.5)

(3.5)

(3.3)

(4.2)

(5.2)

(6.2)

Short term provisions/ tax liabilities

(21.4)

(18.9)

(19.2)

(33.7)

(33.7)

(33.7)

Short term borrowings

0.0

0.0

0.0

0.0

0.0

0.0

Other

(13.2)

(12.8)

(11.5)

(13.1)

(13.1)

(13.1)

Long Term Liabilities

 

 

(0.7)

(0.0)

(0.0)

(2.6)

(2.6)

(2.6)

Long term borrowings

0.0

0.0

0.0

0.0

0.0

0.0

Other long term liabilities

(0.7)

(0.0)

(0.0)

(2.6)

(2.6)

(2.6)

Net Assets

 

 

109.6

89.3

69.3

41.6

49.8

52.8

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

109.6

89.3

69.3

41.6

49.8

52.8

CASH FLOW

Op Cash Flow before WC and tax

32.5

37.0

36.3

35.0

26.1

26.5

Working capital

(1.6)

(3.4)

(7.5)

6.0

(2.0)

(2.0)

Exceptional & other

1.5

1.2

1.1

(1.0)

0.0

0.0

Tax

0.0

(3.4)

(5.0)

(10.2)

(4.4)

(4.5)

Net operating cash flow

 

 

32.4

31.3

24.8

29.9

19.7

20.0

Capex

0.0

0.1

(0.7)

(2.5)

(1.0)

(1.0)

Acquisitions/disposals

(1.3)

(0.6)

0.0

0.0

0.0

0.0

Net interest

26.0

29.0

0.0

0.0

(0.1)

(0.1)

Equity financing

0.0

0.0

0.0

0.0

0.0

0.0

Dividends

(15.8)

(52.6)

(52.6)

(45.6)

(14.0)

(16.8)

Other

0.0

0.0

0.0

(0.8)

0.0

0.0

Net Cash Flow

41.3

7.2

(28.5)

(19.0)

4.5

2.0

Opening (cash)

 

 

(48.8)

(90.1)

(97.3)

(68.8)

(49.8)

(54.3)

FX

0.0

0.0

0.0

0.0

0.0

0.0

Other non-cash movements

0.0

0.0

0.0

0.0

0.0

0.0

Closing (cash)

 

 

(90.1)

(97.3)

(68.8)

(49.8)

(54.3)

(56.3)

Closing net debt/(cash) ex client money

 

(82.3)

(94.4)

(70.6)

(47.4)

(54.3)

(56.3)

Source: bet-at-home, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by bet-at-home and prepared and issued by Edison, in consideration of a fee payable by bet-at-home. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by bet-at-home and prepared and issued by Edison, in consideration of a fee payable by bet-at-home. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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