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Improving momentum

bet-at-home 4 August 2020 Update
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bet-at-home

Improving momentum

H120 headline results

Travel & leisure

4 August 2020

Price

€34.80

Market cap

€244m

€/£0.90

Net cash (€m) at 30 June 2020 (excluding client money)

54.1

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

(13.0)

(12.0)

(37.0)

Rel (local)

(13.8)

(24.4)

(40.8)

52-week high/low

€54.8

€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

H120 results

14 September 2020

Q320 results

9 November 2020

FY20 results

8 March 2021

Analysts

Russell Pointon

+44 (0)20 3077 5700

Sara Welford

+44 (0)20 3077 5700

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

bet-at-home reported headline figures for H120 ahead of consensus expectations. The results are encouraging given revenue growth in Q220 was better than might have been expected with the regulatory changes (Poland and Switzerland) and the impact of COVID-19 on sports betting. Management has reiterated its guidance for FY20, and the strong financial position makes the prospective dividend yield of 7.0% 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

7.5

18.7

12/19

143.3

35.2

4.26

2.00

8.2

5.7

12/20e

127.9

26.1

2.79

2.40

12.5

7.0

12/21e

130.4

26.5

2.83

2.88

12.3

8.3

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

H120: Ahead of consensus

bet-at-home’s Q220 results were ahead of consensus expectations. There was improving momentum with a decline in gross gaming revenue (GGR) of 11.2% yoy versus 13.4% in Q120, albeit against an easier comparative. Excluding the well-flagged revenue losses in Poland and Switzerland, we believe that GGR grew year-on-year, which is impressive given COVID-19’s effect on sports betting. The EBITDA decline of 21.2% was helped by ongoing preservation of marketing firepower, which does not appear to be affecting the number of registered users (5.293m at period end), while continuing to invest in staff. Cash generation appears strong given a net increase in cash and short-term deposits to €54.1m from €48.7m at the end of Q120, leading to a distribution of €2/share.

Consistent guidance for FY20

We leave our forecasts for FY20 of revenue of €127.9m and EBITDA of €26.1m unchanged ahead of the publication of full financial statements on 14 September 2020. Management has reiterated its FY20 guidance of GGR of €120–130m and EBITDA of €23–27m. With an improving outlook for sports betting, eg more football events in H220, including the Champions League games postponed from Q220, and given more than 50% of the forecast FY20 EBITDA has been generated in H120, the forecasts look well supported.

Valuation: 7.0% prospective dividend yield

Having recovered strongly through Q220, the share price has recently pulled back, making the EV/EBITDA for FY20e of 7.2x more attractive. Similarly, the 7.0% prospective dividend yield looks attractive, given the strong financial position of net cash of €54m, with no financial liabilities, versus the market capitalisation of €244m. We continue to believe that a recovery in sports betting and indications of positive regulation changes in Germany, the core market, would be positive catalysts for the share price.

Exhibit 1: Financial summary

Year end 31 December, IFRS

€m

2016

2017

2018

2019

2020e

2021e

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)

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

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

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)

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 accounts, 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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