Currency in EUR
Last close As at 07/06/2023
EUR16.00
▲ 0.25 (1.59%)
Market capitalisation
EUR5,723m
Research: Consumer
OPAP’s FY22 results benefited from the ongoing retail recovery post COVID, and a still-growing contribution from online (despite the tough comparative) as the company’s enhanced offering attracts growing customer numbers. The higher-than-expected profit, despite relative disappointment about Q422’s revenue due to the FIFA World Cup, reinforces management’s cost control credentials against a background of higher external cost pressures. Management’s guidance for further profit growth in FY23 and an undergeared balance sheet should be supportive of high cash returns.
OPAP |
FY22 profit and cash returns exceed estimates |
FY22 results |
Travel and leisure |
27 March 2023 |
Share price performance
Business description
Next events
Analysts
OPAP is a research client of Edison Investment Research Limited |
OPAP’s FY22 results benefited from the ongoing retail recovery post COVID, and a still-growing contribution from online (despite the tough comparative) as the company’s enhanced offering attracts growing customer numbers. The higher-than-expected profit, despite relative disappointment about Q422’s revenue due to the FIFA World Cup, reinforces management’s cost control credentials against a background of higher external cost pressures. Management’s guidance for further profit growth in FY23 and an undergeared balance sheet should be supportive of high cash returns.
Year end |
GGR* (€m) |
EBITDA** |
EPS** |
DPS |
P/E |
Yield |
12/21 |
1,538.8 |
551.2 |
0.82 |
1.50 |
17.7 |
10.3 |
12/22 |
1,939.0 |
722.6 |
1.22 |
1.45 |
11.9 |
9.9 |
12/23e |
2,063.5 |
742.8 |
1.24 |
1.48 |
11.8 |
10.2 |
12/24e |
2,110.2 |
746.8 |
1.26 |
1.51 |
11.6 |
10.3 |
Note: *GGR = gross gaming revenue. *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
EBITDA at top of expectations, special dividend
OPAP’s FY22 revenue of €1,939m was c 5% below our estimated €2,031m, but EBITDA of €736m was c 2% above the guided €720m (company’s definition includes associates and exceptional items). The performance is noteworthy as EBITDA was towards the top end of the guidance from the start of 2022 despite revenue being more than 11% below that initial guidance. At the H122 stage management reduced guidance to reflect the deteriorating macroeconomic environment, but it was subsequently upgraded at the Q322 results. Weak retail (1% yo-y) and online sports betting (-7%) in Q422 during the FIFA World Cup, with a more favourable customer win ratio, further dampened OPAP’s FY22 growth. The period end net debt position improved to €63.9m (pre IFRS 16 leases and investments) from €186.3m (end FY21), enabling a final dividend (€0.7/share) and a special dividend (€0.45/share), taking the FY22 return to €1.45/share – a 119% payout ratio.
Further underlying growth in revenue and profit
Our new FY23 estimates are in line with management’s first-time guidance for revenue of €2,060–2,140m (+6–10% y-o-y) and EBITDA of €740–760m (+1–3%). The guidance understates underlying EBITDA growth (we estimate 3–5%) as FY22 included c €15m associate income from Betano, which has been sold. The underlying FY23 margin compression to 35.5–35.9% from FY22’s 37.2% is due to management’s higher expected revenue growth (low-teens) from lower-margin online versus retail (low single-digit growth), taking the margin back to prior year levels, 35.8% in FY21.
Valuation: Discount to peers
OPAP continues to trade at a discount to its European gaming peers, with a P/E multiple of 11.8x (peer median of 19.0x (source: Refinitiv)). While our estimated FY23 revenue growth for OPAP of 6% is below the peer median (8%), its higher FY23e EBIT margin of 29.4% (peer median 12.5%) enables significantly higher cash returns with a FY23e dividend yield of 10.2% (peer median 1.3%).
Exhibit 1: Financial summary
€'m |
2020 |
2021 |
2022 |
2023e |
2024e |
||
31-December |
ISA |
ISA |
ISA |
ISA |
ISA |
||
INCOME STATEMENT |
|||||||
Revenue |
|
|
1,129.8 |
1,538.8 |
1,939.0 |
2,063.5 |
2,110.2 |
NGR |
|
|
737.3 |
1,043.9 |
1,333.4 |
1,419.2 |
1,451.3 |
Cost of Sales |
(672.7) |
(883.7) |
(1,082.8) |
(1,175.8) |
(1,200.8) |
||
Gross Profit |
457.1 |
655.2 |
856.2 |
887.8 |
909.4 |
||
Other Income |
42.5 |
217.4 |
230.2 |
238.0 |
238.7 |
||
EBITDA |
|
|
263.9 |
551.2 |
722.6 |
742.8 |
746.8 |
Operating profit (before amort. and excepts.) |
|
|
147.2 |
408.6 |
591.2 |
606.6 |
610.7 |
Impairments |
(36.8) |
(4.7) |
(20.2) |
0.0 |
0.0 |
||
Exceptionals |
121.2 |
(0.5) |
179.9 |
0.0 |
0.0 |
||
Share-based payments |
0.0 |
(2.2) |
(2.3) |
(2.3) |
(2.3) |
||
Reported operating profit |
231.6 |
401.3 |
748.6 |
604.3 |
608.3 |
||
Net Interest |
(33.5) |
(43.6) |
(40.1) |
(15.3) |
(10.3) |
||
Joint ventures & associates (post tax) |
18.3 |
(0.4) |
14.8 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
132.0 |
364.6 |
565.9 |
591.3 |
600.4 |
Profit Before Tax (reported) |
|
|
216.4 |
357.3 |
723.3 |
589.0 |
598.1 |
Reported tax |
(17.3) |
(96.4) |
(127.2) |
(130.1) |
(132.1) |
||
Profit After Tax (norm) |
100.3 |
284.4 |
441.4 |
461.2 |
468.3 |
||
Profit After Tax (reported) |
199.1 |
260.9 |
596.0 |
458.9 |
466.0 |
||
Minority interests |
6.1 |
(1.4) |
(3.7) |
(12.0) |
(12.5) |
||
Net income (normalised) |
106.4 |
282.9 |
437.7 |
450.3 |
457.8 |
||
Net income (reported) |
205.2 |
259.4 |
592.3 |
446.9 |
453.5 |
||
Average Number of Shares Outstanding (m) |
334 |
344 |
358 |
363 |
363 |
||
EPS - normalised (c) |
|
|
31.83 |
82.28 |
122.22 |
123.92 |
126.01 |
EPS - normalised fully diluted (c) |
|
|
31.83 |
82.28 |
122.22 |
123.92 |
126.01 |
EPS - basic reported (€) |
|
|
0.61 |
0.75 |
1.65 |
1.23 |
1.25 |
Dividend (€) |
0.55 |
1.50 |
1.45 |
1.48 |
1.51 |
||
Revenue growth (%) |
(30.3) |
36.2 |
26.0 |
6.4 |
2.3 |
||
Gross Margin (%) |
40.5 |
42.6 |
44.2 |
43.0 |
43.1 |
||
EBITDA Margin (%) |
23.4 |
35.8 |
37.3 |
36.0 |
35.4 |
||
Normalised Operating Margin |
13.0 |
26.6 |
30.5 |
29.4 |
28.9 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
1,806.4 |
1,695.0 |
1,553.2 |
1,439.7 |
1,326.2 |
Intangible Assets |
1,578.9 |
1,476.0 |
1,364.0 |
1,269.3 |
1,174.6 |
||
Tangible Assets |
127.5 |
105.6 |
88.9 |
70.1 |
51.4 |
||
Investments & other |
100.0 |
113.4 |
100.3 |
100.3 |
100.3 |
||
Current Assets |
|
|
629.1 |
1,007.5 |
1,018.0 |
900.0 |
833.7 |
Stocks |
6.2 |
4.7 |
5.6 |
5.9 |
6.0 |
||
Debtors |
68.5 |
90.9 |
102.1 |
108.7 |
111.1 |
||
Cash & cash equivalents |
506.9 |
860.4 |
724.4 |
729.5 |
660.6 |
||
Other |
47.6 |
51.6 |
185.9 |
55.9 |
55.9 |
||
Current Liabilities |
|
|
(366.1) |
(571.5) |
(808.6) |
(853.9) |
(859.0) |
Creditors |
(149.4) |
(168.2) |
(181.7) |
(227.0) |
(232.1) |
||
Tax and social security |
(27.8) |
(60.7) |
(117.2) |
(117.2) |
(117.2) |
||
Short term borrowings |
(40.7) |
(62.5) |
(289.5) |
(289.5) |
(289.5) |
||
Other |
(148.2) |
(280.2) |
(220.2) |
(220.2) |
(220.2) |
||
Long Term Liabilities |
|
|
(1,286.7) |
(1,181.7) |
(676.4) |
(463.5) |
(363.3) |
Long term borrowings |
(1,057.9) |
(1,035.2) |
(546.0) |
(296.0) |
(156.0) |
||
Other long term liabilities |
(228.8) |
(146.5) |
(130.4) |
(167.5) |
(207.2) |
||
Net Assets |
|
|
782.7 |
949.4 |
1,086.3 |
1,022.4 |
937.6 |
Minority interests |
(41.1) |
(38.5) |
(32.7) |
(33.5) |
(34.4) |
||
Shareholders' equity |
|
|
741.6 |
910.9 |
1,053.6 |
988.9 |
903.3 |
CASH FLOW |
|||||||
Op Cash Flow before WC and tax |
263.9 |
553.4 |
724.9 |
745.1 |
749.2 |
||
Working capital |
(34.8) |
21.1 |
40.7 |
38.4 |
2.5 |
||
Exceptional & other |
4.5 |
(4.5) |
1.3 |
34.7 |
37.5 |
||
Tax |
(12.1) |
(46.1) |
(80.4) |
(130.1) |
(132.1) |
||
Operating Cash Flow |
|
|
221.4 |
523.9 |
686.6 |
688.1 |
657.1 |
Net interest |
(32.5) |
(30.1) |
(26.6) |
(15.3) |
(10.3) |
||
Capex |
(18.9) |
(24.2) |
(22.8) |
(25.0) |
(25.0) |
||
Acquisitions/disposals |
(90.2) |
(19.0) |
(106.4) |
0.0 |
0.0 |
||
Equity financing |
(0.1) |
(0.2) |
(2.0) |
0.0 |
0.0 |
||
Dividends |
(214.7) |
(91.0) |
(141.4) |
(511.6) |
(539.1) |
||
Net new borrowings |
(12.1) |
0.5 |
(262.3) |
(250.0) |
(140.0) |
||
Other |
20.0 |
(6.3) |
(261.0) |
118.9 |
(11.6) |
||
Net Cash Flow |
(126.9) |
353.5 |
(135.9) |
5.1 |
(68.9) |
||
Opening cash |
|
|
633.8 |
506.9 |
860.4 |
724.5 |
729.5 |
Closing cash |
|
|
506.9 |
860.4 |
724.5 |
729.5 |
660.6 |
Closing net debt/(cash) incl IFRS 16, excl investments |
|
591.7 |
237.3 |
111.1 |
(144.0) |
(215.1) |
Source: Company data, OPAP
|
|
Research: Healthcare
Nicox’s headline FY22 results were in line with the Q422 update provided in January, although greater clarity on gross product sales royalties suggests that Vyzulta sales traction is stronger than we had anticipated. Gross product sales-related licensing revenue came in at €5.2m (+39% year-on-year), the bulk of which we assume was derived from Vyzulta royalties, above our €4.9m estimate. We modestly increased our Vyzulta forecasts, although we note that NCX-470 remains the primary driver for our valuation, and our local currency NCX-470 estimates are unchanged. Given a strengthening euro versus the US dollar and increases in our R&D cost estimates following the FY22 results, we revise our rNPV valuation down to €166.8m (versus €190.4m previously).
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