Last close As at 05/08/2026
EUR13.29
▲ −0.16 (−1.15%)
Market capitalisation
EUR10,848m
Research: Consumer
FY19 results were in line demonstrating a strong underlying business, but these have been overshadowed by the impact of COVID-19 on FY20. Management estimates that the disruption (shop closures) will have an impact on monthly gross gaming revenues (GGR) of €130–140m and EBITDA of €50–53m. Our new forecasts assume a €400m revenue loss equivalent to three months of full disruption during FY20 and we also have reduced FY21 GGR forecasts by 9% to reflect the potential impact on consumer confidence. Nonetheless, the balance sheet remains robust and we forecast a final dividend for FY20 (payable in FY21). The shares trade at 6.8x EV/EBITDA and 12.7x P/E for FY21 with an 11.8% yield.
Written by
OPAP |
Well capitalised to weather COVID-19 |
FY19 results |
Travel & leisure |
6 April 2020 |
Share price performance
Business description
Next events
Analysts
OPAP is a research client of Edison Investment Research Limited |
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FY19 results were in line demonstrating a strong underlying business, but these have been overshadowed by the impact of COVID-19 on FY20. Management estimates that the disruption (shop closures) will have an impact on monthly gross gaming revenues (GGR) of €130–140m and EBITDA of €50–53m. Our new forecasts assume a €400m revenue loss equivalent to three months of full disruption during FY20 and we also have reduced FY21 GGR forecasts by 9% to reflect the potential impact on consumer confidence. Nonetheless, the balance sheet remains robust and we forecast a final dividend for FY20 (payable in FY21). The shares trade at 6.8x EV/EBITDA and 12.7x P/E for FY21 with an 11.8% yield.
Year end |
GGR |
EBITDA |
EPS* |
DPS |
P/E |
Yield |
12/18 |
1,547.0 |
353.6 |
0.52 |
0.70 |
12.5 |
10.8 |
12/19 |
1,619.9 |
411.2 |
0.62 |
1.00 |
10.4 |
15.4 |
12/20e |
1,385.1 |
302.2 |
0.29 |
0.50 |
22.3 |
7.8 |
12/21e |
1,709.7 |
420.7 |
0.51 |
0.77 |
12.7 |
11.8 |
Note: *EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
COVID-19 dramatically affects operations
OPAP’s stores and gaming halls across Greece have been closed since 14 March and will not reopen until at least 11 April 2020, and the nationwide lockdown has restricted street vendors for the distribution of Scratch & Passive lotteries. The online lottery business has seen an increase in activity and, although this remains only a small portion of the total, OPAP has stated that it is focusing on expanding its online games portfolio. In terms of online sports, this has been significantly affected by the lack of sporting fixtures. OPAP also announced that CEO Damian Cope will stand down in May 2020, with a replacement yet to be announced.
Our forecasts assume equivalent of 3 months’ impact
It is difficult to forecast the duration of the COVID-19 outbreak, or the subsequent economic impact of restrictions. The direct impact is a 99% reduction of gaming revenues during the disrupted period and management stated that the monthly financial impact from COVID-19 related restrictions will be c €130–140m on GGR and c €50–53m on EBITDA, before cost mitigations (c €4–6m). We note that OPAP has a relatively low fixed cost base, given its commission structure for agents, and 35% gaming tax based on revenues. Our forecasts assume the equivalent of three months of full disruption and we have lowered our underlying (excluding Stoiximan) FY20 GGR forecasts by €400m and EBITDA by €145m.
Valuation: 11.8% dividend yield for FY21e
OPAP reported FY19 net debt of €483m (€419m pre IFRS 16, excluding €10m of investments) and the net debt/LTM EBITDA was 1.0x. At April 2020, post IFRS net debt was €609m, due to the payment of the extraordinary dividend in Q120. We assume no further dividend for FY19 but forecast a final dividend for FY20 (payable in FY21) and a normal policy thereafter. The shares trade at 6.8x EV/EBITDA and 12.7x P/E for FY21 with an 11.8% dividend yield.
FY19 results in line but FY20 hit hard by COVID-19
Impact of COVID-19: Retail closed until at least mid-April
OPAP’s stores and gaming halls across Greece have been closed since 14 March and will not reopen until at least 11 April 2020. Similar measures have affected the Cypriot business (c 5% of total revenues) and the nationwide lockdown has restricted street vendors for the distribution of Scratch & Passive lotteries.
The online lottery business has seen an increase in activity and, although this remains only a small portion of the total, OPAP has stated that it is focusing on expanding its online games portfolio. In terms of online sports, this has also been significantly affected by the lack of sporting fixtures.
Financial impact per month: €130–140m on GGR and €50–53m on EBITDA
It is currently very difficult to forecast the duration of the COVID-19 outbreak, and the subsequent economic impact of the restrictions. Current restrictions are leading to a 99% reduction in gaming revenues. However, about 60% of GGR are linked to revenue-based payments and therefore OPAP has a relatively low fixed cost base – eg the commission structure for agents, and 35% gaming tax based on revenues and revenue sharing agreements with multiple vendors. The company has specifically not reduced headcount or salaries at present.
Management has stated that the monthly financial impact from COVID-19 related restrictions will be c €130–140m on GGR and c €50–53m on EBITDA, before cost mitigations of c €4–6m. The expected cash burn per month is c €20m, due to fixed costs. We assume a total disruption duration equivalent to three months (which allows for a slow return to normality), and we have lowered our underlying (excluding Stoiximan) FY20 GGR forecasts by €400m and EBITDA by €145m.
Balance sheet remains robust
In addition to proactively managing capex by freezing uncommitted spend, OPAP has recently secured additional funding of €325m (including overdrafts). At 1 April 2020, the company’s cash balance was €623m, with total net debt of €609m (post IFRS, and excluding €10m of investments). This includes the €1.00/share extraordinary dividend (€172m cash component) from Q120 and compares to net debt of €483.3m at FY19.
Our forecasts assume a total of three months’ equivalent of negligible monthly revenues and, on this basis, we believe that OPAP continues to have a sufficient cash position and sufficient liquidity to meet future payment obligations.
Extraordinary dividend paid in Q120, with final dividend under discussion
OPAP paid a €1.00 extraordinary dividend in Q120, which was distributed as €172m cash with 48.2% of shareholders electing for a scrip dividend. Given the current uncertainty surrounding coronavirus, management will delay its recommendation concerning a final dividend for FY19. We have assumed no further dividend to be paid corresponding to FY19, but we assume the company will return to its normal dividend policy from FY20 onwards, which is to pay out the bulk of free cash flow. Our forecasts assume a final FY20 dividend to be paid in FY21.
FY19 results summary
FY19 GGR increased by 4.7%, driven by full roll out of VLTs
FY19 GGR increased 4.7% to €1,619.9m and Q419 GGR increased by 1.4% to €446.7m, with better sports betting in the last quarter (up 5.7% to €112.4m), as well as continued momentum in video lottery terminals (VLTs) (up 24.2% to €85.0m). In terms of VLTs, management has achieved its main target of installing 25,000 VLT machines by year end, in 428 gaming halls and 2,161 OPAP stores.
Lottery was down 7.8% to €201.8m during Q419 vs the previous year, leading to a flat performance for FY19. The weaker quarter was due to KINO side bets’ natural attrition and less favourable Joker jackpot roll-overs. Encouragingly, Instant and Passives increased by 0.8% in Q419 to €47.4m, although this was still a 3.1% decline for the year as a whole.
Adjusted EBITDA margin of 25.4%
FY19 adjusted EBITDA of €411.2m was in line with our estimates with a stronger margin helped by continued cost containment measures. Note that our adjusted EBITDA excludes the contribution from Stoiximan, which is now fully consolidated in our forecasts from H220 onwards (previously from January 2020, but the deal is yet to conclude). We also exclude the €7.1m impairment of financial assets.
Forecasts: FY20 dramatically affected by COVID-19
Due to COVID-19 related shop closures, we have lowered our underlying FY20 GGR forecasts (excluding Stoiximan) by €400m and our EBITDA forecasts by €145m. This is the approximate equivalent to three months of full business interruption due to COVID-19 related disruption. Although it is clearly difficult to forecast the duration of shop closures, we assume that in addition to one month of closure (until mid-April) there is likely to be a prolonged residual impact once stores reopen, as many customers may be unwilling to enter shops for several months. To reiterate, we forecast the net GGR revenue impact from the closures and residual slowdowns upon reopening to be c €400m. We will amend our forecasts as the situation becomes clearer.
Since it is highly likely that consumer confidence will be dented as a result of the current disruptions, we have lowered our FY21 GGR forecasts by 9.3%. Our FY21 EBITDA estimate decreases by 12.5%.
We now also assume that the Stoiximan acquisition will not complete until H220 and our forecasts reflect full consolidation from H220 onwards, rather than from January 2020.
As noted above, we assume that no further payment will be made this year for the FY19 dividend. Going forward, we assume that OPAP continues its dividend policy of paying out the bulk of free cash flow. Even with the three-month closure in our estimates, we believe OPAP has a sufficiently strong capital structure to support the continuation of its dividend policy and depending on the duration of the shop closures, it might even choose to pay a final dividend for FY19 also. An announcement on the FY19 dividend is expected by June 2020.
We summarise our estimate changes in the table below.
Exhibit 1: Estimate changes
GGR (€m) |
EBITDA (€m) |
Normalised EPS (€) |
|||||||
Old |
New |
% chg. |
Old |
New |
%chg. |
Old |
New |
%chg. |
|
2019 |
1,635.0 |
1,619.9 |
(0.9) |
408.9 |
411.2 |
0.6 |
0.62 |
0.62 |
0.0 |
2020e |
1,833.0 |
1,385.1 |
(24.4) |
456.7 |
302.2 |
(33.8) |
0.69 |
0.29 |
(57.9) |
2021e |
1,884.6 |
1,709.7 |
(9.3) |
480.6 |
420.7 |
(12.5) |
0.72 |
0.51 |
(29.2) |
Source: Edison Investment Research estimates, OPAP accounts
Exhibit 2: Financial summary
€'m |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020e |
2021e |
2022e |
||
Year end 31 December |
ISA |
ISA |
ISA |
ISA |
ISA |
ISA |
ISA |
ISA |
ISA |
||
INCOME STATEMENT |
|||||||||||
GGR |
|
|
1,377.7 |
1,399.7 |
1,397.6 |
1,455.5 |
1,547.0 |
1,619.9 |
1,385.1 |
1,709.7 |
1,761.3 |
NGR |
|
|
973.1 |
987.7 |
930.8 |
972.9 |
1,039.9 |
1,086.2 |
934.7 |
1,152.7 |
1,187.3 |
Cost of Sales |
(764.2) |
(774.3) |
(827.5) |
(862.9) |
(904.3) |
(946.9) |
(795.9) |
(962.0) |
(988.3) |
||
Gross Profit |
613.5 |
625.3 |
570.1 |
592.6 |
642.7 |
673.0 |
589.2 |
747.8 |
773.1 |
||
EBITDA |
|
|
346.5 |
377.1 |
307.5 |
306.5 |
353.6 |
411.2 |
302.2 |
420.7 |
441.4 |
Normalised operating profit |
|
|
289.6 |
318.1 |
252.4 |
218.8 |
258.4 |
296.6 |
170.7 |
287.4 |
306.2 |
Impairments |
7.5 |
(14.1) |
0.0 |
(2.7) |
(17.5) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
(7.1) |
0.0 |
0.0 |
0.0 |
||
Share-based payments |
(0.9) |
(1.2) |
(3.1) |
(1.5) |
(1.6) |
(1.6) |
(1.6) |
(1.6) |
(1.6) |
||
Reported operating profit |
296.2 |
302.8 |
249.3 |
214.6 |
239.3 |
287.8 |
169.1 |
285.8 |
304.5 |
||
Net Interest |
1.6 |
(4.7) |
(13.3) |
(21.1) |
(23.5) |
(27.1) |
(38.7) |
(38.4) |
(33.6) |
||
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
8.5 |
4.0 |
0.0 |
0.0 |
||
Other |
7.8 |
1.5 |
1.0 |
(0.3) |
0.0 |
0.0 |
0.0 |
0.0 |
1.0 |
||
Profit Before Tax (norm) |
|
|
299.0 |
314.9 |
240.0 |
197.5 |
234.9 |
278.0 |
136.1 |
249.0 |
273.6 |
Profit Before Tax (reported) |
|
|
305.6 |
299.6 |
236.9 |
193.2 |
215.9 |
269.2 |
134.4 |
247.3 |
271.9 |
Reported tax |
(106.4) |
(89.7) |
(64.1) |
(61.6) |
(70.6) |
(67.1) |
(36.7) |
(64.7) |
(68.4) |
||
Profit After Tax (norm) |
212.3 |
223.6 |
170.4 |
140.2 |
166.8 |
200.1 |
99.3 |
184.3 |
205.2 |
||
Profit After Tax (reported) |
199.2 |
209.9 |
172.9 |
131.6 |
145.3 |
202.1 |
97.7 |
182.6 |
203.5 |
||
Minority interests |
(4.2) |
0.8 |
(2.6) |
(5.4) |
(2.0) |
0.3 |
(2.3) |
(8.8) |
(10.2) |
||
Discontinued operations |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net income (normalised) |
208.1 |
224.4 |
167.8 |
134.8 |
164.8 |
200.4 |
97.0 |
175.5 |
195.0 |
||
Net income (reported) |
195.0 |
210.7 |
170.2 |
126.2 |
143.3 |
202.4 |
95.3 |
173.9 |
193.3 |
||
Basic average number of shares outstanding (m) |
319 |
319 |
319 |
318 |
318 |
322 |
332 |
342 |
352 |
||
EPS - basic normalised (€) |
|
|
0.65 |
0.70 |
0.53 |
0.42 |
0.52 |
0.62 |
0.29 |
0.51 |
0.55 |
EPS - diluted normalised (€) |
|
|
0.65 |
0.70 |
0.53 |
0.42 |
0.52 |
0.62 |
0.29 |
0.51 |
0.55 |
EPS - basic reported (€) |
|
|
0.61 |
0.66 |
0.53 |
0.40 |
0.45 |
0.63 |
0.29 |
0.51 |
0.55 |
Dividend (€) |
0.70 |
0.40 |
1.29 |
1.10 |
0.70 |
1.00 |
0.50 |
0.77 |
0.80 |
||
Revenue growth (%) |
1.6 |
(-0.2) |
4.1 |
6.3 |
4.7 |
(-14.5) |
23.4 |
3.0 |
|||
Gross Margin (%) |
44.5 |
44.7 |
40.8 |
40.7 |
41.5 |
41.5 |
42.5 |
43.7 |
43.9 |
||
EBITDA Margin (%) |
25.2 |
26.9 |
22.0 |
21.1 |
22.9 |
25.4 |
21.8 |
24.6 |
25.1 |
||
Normalised Operating Margin |
21.0 |
22.7 |
18.1 |
15.0 |
16.7 |
18.3 |
12.3 |
16.8 |
17.4 |
||
BALANCE SHEET |
|||||||||||
Fixed Assets |
|
|
1,343.4 |
1,318.9 |
1,330.3 |
1,356.5 |
1,384.2 |
1,370.1 |
1,346.8 |
1,231.8 |
1,115.0 |
Intangible Assets |
1,284.2 |
1,237.2 |
1,231.0 |
1,218.5 |
1,157.2 |
1,096.0 |
1,060.0 |
977.1 |
892.5 |
||
Tangible Assets |
44.2 |
56.2 |
67.6 |
109.3 |
111.5 |
162.3 |
175.1 |
143.0 |
110.9 |
||
Investments & other |
15.0 |
25.5 |
31.7 |
28.7 |
115.5 |
111.7 |
111.7 |
111.7 |
111.7 |
||
Current Assets |
|
|
409.4 |
389.9 |
437.4 |
440.4 |
385.5 |
869.6 |
928.8 |
998.8 |
1,052.8 |
Stocks |
3.0 |
4.2 |
12.5 |
7.9 |
10.7 |
6.7 |
11.7 |
16.7 |
21.7 |
||
Debtors |
92.3 |
55.2 |
80.6 |
127.8 |
138.3 |
161.2 |
171.2 |
166.2 |
161.2 |
||
Cash & cash equivalents |
297.4 |
301.7 |
273.5 |
246.1 |
182.6 |
633.8 |
678.0 |
748.0 |
802.0 |
||
Other |
16.7 |
28.8 |
70.8 |
58.5 |
54.0 |
67.9 |
67.9 |
67.9 |
67.9 |
||
Current Liabilities |
|
|
(457.9) |
(325.0) |
(390.2) |
(482.0) |
(299.3) |
(326.4) |
(311.4) |
(296.4) |
(281.4) |
Creditors |
(170.4) |
(127.1) |
(149.3) |
(173.9) |
(176.7) |
(184.1) |
(169.1) |
(154.1) |
(139.1) |
||
Tax and social security |
(178.2) |
(129.9) |
(55.5) |
(89.8) |
(8.6) |
(5.3) |
(5.3) |
(5.3) |
(5.3) |
||
Short term borrowings |
(0.0) |
(32.1) |
(118.7) |
(169.2) |
(0.2) |
(13.9) |
(13.9) |
(13.9) |
(13.9) |
||
Other |
(109.3) |
(35.9) |
(66.7) |
(49.2) |
(113.8) |
(123.1) |
(123.1) |
(123.1) |
(123.1) |
||
Long Term Liabilities |
|
|
(59.8) |
(181.0) |
(305.3) |
(556.7) |
(710.8) |
(1,141.5) |
(1,266.5) |
(1,166.5) |
(1,066.5) |
Long term borrowings |
0.0 |
(115.0) |
(263.0) |
(513.1) |
(650.3) |
(1,103.2) |
(1,228.2) |
(1,128.2) |
(1,028.2) |
||
Other long term liabilities |
(59.8) |
(66.0) |
(42.3) |
(43.6) |
(60.6) |
(38.3) |
(38.3) |
(38.3) |
(38.3) |
||
Net Assets |
|
|
1,235.1 |
1,202.8 |
1,072.2 |
758.2 |
759.5 |
771.7 |
697.7 |
767.7 |
819.9 |
Minority interests |
(67.4) |
(41.0) |
(37.0) |
(43.4) |
(36.8) |
(18.1) |
(20.0) |
(20.0) |
(20.0) |
||
Shareholders' equity |
|
|
1,167.7 |
1,161.8 |
1,035.3 |
714.8 |
722.8 |
753.6 |
677.7 |
747.7 |
799.9 |
CASH FLOW |
|||||||||||
Op Cash Flow before WC and tax |
347.4 |
378.3 |
310.7 |
308.0 |
355.2 |
412.9 |
303.9 |
422.4 |
443.0 |
||
Working capital |
7.0 |
(41.0) |
(71.9) |
(9.2) |
(25.0) |
(16.5) |
(25.0) |
(10.0) |
(10.0) |
||
Exceptional & other |
1.0 |
9.1 |
(12.4) |
(0.4) |
1.1 |
(13.9) |
0.0 |
0.0 |
0.0 |
||
Tax |
(68.8) |
(142.5) |
(116.9) |
(31.4) |
(51.7) |
(78.9) |
(36.7) |
(54.7) |
(58.4) |
||
Net operating cash flow |
|
|
286.6 |
203.9 |
109.4 |
266.9 |
279.6 |
303.6 |
242.1 |
357.6 |
374.6 |
Capex |
(18.6) |
(39.6) |
(42.9) |
(96.3) |
(51.9) |
(34.8) |
(15.0) |
(20.0) |
(20.0) |
||
Acquisitions/disposals |
(18.6) |
(0.8) |
(0.0) |
(31.5) |
(47.9) |
(21.9) |
(94.9) |
0.0 |
0.0 |
||
Net interest |
1.6 |
(4.2) |
(11.9) |
(19.6) |
(24.6) |
(22.3) |
(38.7) |
(38.4) |
(33.6) |
||
Equity financing |
(8.3) |
(24.2) |
(11.9) |
(1.8) |
(5.5) |
(0.1) |
0.0 |
0.0 |
0.0 |
||
Dividends |
(79.8) |
(277.3) |
(292.8) |
(446.1) |
(154.0) |
(164.0) |
(172.0) |
(120.4) |
(156.9) |
||
Other |
48.1 |
(0.7) |
(12.7) |
0.3 |
(18.6) |
(11.1) |
(2.3) |
(8.8) |
(10.2) |
||
Net Cash Flow |
211.0 |
(142.9) |
(262.8) |
(328.0) |
(22.8) |
49.3 |
(80.8) |
170.0 |
154.0 |
||
Opening net debt/(cash) |
|
|
(86.4) |
(297.4) |
(154.5) |
108.3 |
436.2 |
467.9 |
483.3 |
564.1 |
394.0 |
FX |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
0.0 |
0.0 |
0.0 |
0.0 |
(8.9) |
(64.8) |
0.0 |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
(297.4) |
(154.5) |
108.3 |
436.2 |
467.9 |
483.3 |
564.1 |
394.0 |
240.1 |
Source: OPAP accounts, Edison Investment Research
|
|
Research: Energy & Resources
Coro Energy has announced that in light of the unprecedented market changes, its board has initiated a material cost-reduction programme. As a result, James Menzies, the company’s CEO, saw his employment terminated with immediate effect. The board also mutually agreed with Nick Cooper that he will leave the company with immediate effect. Following these changes, the board will consist of James Parsons as nonexecutive chairman and Andrew Dennan, Marco Fumagalli and Fiona MacAulay as non-executive directors. As result of recent developments and Coro’s current situation, we are suspending our valuation.