Last close As at 05/08/2026
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EUR10,848m
Research: Consumer
OPAP’s Q319 results saw similar trends to H119 and were in line with our estimates. Gross gaming revenues (GGR) increased 6.7% to €393.6m, driven by a 43.2% increase in video lottery terminals (VLT) GGR and a stronger lottery performance. Alongside revenue growth, OPAP is successfully containing costs, which led to a 25.8% EBITDA margin and a 24.5% increase in net profit. OPAP has announced that it will pay an extraordinary dividend in Q120 (rather than an interim dividend) – on our estimates this equates to an 11.9% dividend yield for FY19. For FY20, OPAP trades at 8.6x EV/EBITDA and 15.2x P/E with an 8.9% dividend yield.
Written by
OPAP |
Surprising extraordinary dividend for Q120 |
Q319 results |
Travel & leisure |
28 November 2019 |
Share price performance
Business description
Next events
Analysts
OPAP is a research client of Edison Investment Research Limited |
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OPAP’s Q319 results saw similar trends to H119 and were in line with our estimates. Gross gaming revenues (GGR) increased 6.7% to €393.6m, driven by a 43.2% increase in video lottery terminals (VLT) GGR and a stronger lottery performance. Alongside revenue growth, OPAP is successfully containing costs, which led to a 25.8% EBITDA margin and a 24.5% increase in net profit. OPAP has announced that it will pay an extraordinary dividend in Q120 (rather than an interim dividend) – on our estimates this equates to an 11.9% dividend yield for FY19. For FY20, OPAP trades at 8.6x EV/EBITDA and 15.2x P/E with an 8.9% dividend yield.
Year end |
GGR |
EBITDA |
EPS* |
DPS |
P/E |
Yield |
12/17 |
1,455.5 |
306.5 |
0.42 |
1.10 |
24.5 |
10.6 |
12/18 |
1,547.0 |
353.6 |
0.52 |
0.70 |
20.0 |
6.7 |
12/19e |
1,635.0 |
408.9 |
0.62 |
1.24 |
16.9 |
11.9 |
12/20e |
1,833.0 |
456.7 |
0.69 |
0.92 |
15.2 |
8.9 |
Note: *EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Continuing trends from H119
Q319 GGR grew 6.7% to €393.6m, driven by a 43.2% increase in VLT GGR to €72.8m and good progress in lottery (up 4.1% to €197.4m), as well as a recovery in Instants and Passives. Sports betting declined by 5.7% to €91.9m, with difficult comparatives from the previous year (World Cup in FY18). Alongside the revenue growth, cost containment remains a key focus and the Q319 EBITDA margin was a solid 25.8% (up 220bps). Our FY20 and FY21 EPS are raised by c 4.5% and 2.8% largely due to lower future corporation tax (the effective rate goes from 29% to 24% from FY20).
Online regulation and Stoiximan poised for FY20
OPAP’s acquisition of Stoiximan (online sports) has recently been approved by the Hellenic Competition Commission and the final closing of the transaction is expected in the near term. As detailed in our September update, our forecasts assume full consolidation from January 2020. Online regulation in Greece is still pending, with legislation expected in FY20 and we expect OPAP will seek to apply for one of the new licences once proper regulation is in place.
Valuation: 11.9% dividend yield for FY19e
OPAP reported Q319 net debt of €485m (€550m post IFRS 16) and the net debt/LTM EBITDA was 1.2x. OPAP has announced that it will pay an extraordinary dividend in Q120 of no less than the FY19 net profit. Together with the final dividend, we estimate a total FY19 dividend of €1.24/share, which equates to an 11.9% dividend yield for FY19. For FY20, the stock trades at 8.6x EV/EBITDA and 15.2x P/E with a very attractive dividend (excluding exceptionals) of 8.9%.
Q319 results summary: Similar trends to H119
Q319 GGR increased by 6.7%, driven by lottery and VLTs
Q319 GGR increased 6.7% to €393.6m, boosted by the contribution of new products. This included a 43.2% increase in VLTs (18.5% of revenues), as well as lasting positive momentum from Kino side bets and improved Joker products, which led to an uptick in lottery (a 4.1% increase to €197.4m). Betting declined by 5.7% (to €91.9m), although the core Pame Stoixima product was stable, despite difficult comps (FIFA World Cup in 2018). Instants and passives posted a 1.8% recovery in the quarter, reaching €31.6m.
Adjusted EBITDA margin of 25.8%: Successful cost containment
Q319 adjusted EBITDA increased by 16.5% to €101.6m, representing a 25.8% margin (vs 23.6% in the prior year). Key cost containment measures included a significant drop in IT costs, which declined by 36.7% to €7.3m in Q319.
Extraordinary dividend to be paid in Q120
OPAP has announced that it intends to pay an extraordinary dividend in Q120, which will be no less than the net profit for FY19. There will be no interim dividend and the extraordinary dividend will be financed through existing cash balances as well as additional external debt. Altogether, we estimate an extraordinary dividend of €0.62/share (equating to our FY19 normalised EPS forecast), as well as a final dividend of €0.62/share.
Sazka Group now a 40% shareholder
As previously announced, Sazka Group has completed its tender offer for OPAP shares. During the acceptance period, approximately 7.25% of shares were offered and Sazka Group now holds 40% of OPAP’s total paid-up capital.
Stoiximan: Approval granted by the Hellenic Competition Authority
In September 2018, OPAP announced the acquisition of a 36.75% stake in TCB Holdings (the holding company of Stoixman) for €50m, followed by a further €94.9m investment in January 2019. As a result, OPAP will have a 69% controlling stake in TCB’s Greek and Cypriot operations and a 36.75% stake in the other markets.
The acquisition of Stoiximan was approved in November by the Hellenic Competition Commission (HCC) and the transaction is expected to complete in the near term. We continue to forecast full consolidation from January 2020.
Online regulation in Greece
In October, the Greek government presented an amended online gambling bill for legislative scrutiny. We understand that there may be a change to the tax code, whereby corporation tax will be applied to net income prior to gambling duties (rather than after). We expect further details in due course, with possible regulation in FY20.
In September, it was also reported that Greece’s highest administrative court, the Council of State, has ruled that OPAP’s online betting licence is invalid, leading to its potential revocation. The ruling is of little practical relevance, given that current contribution of online betting is not material (below 1% of OPAP’s total revenue) and going forward, OPAP will principally offer online sports through Stoiximan. Nonetheless, OPAP is challenging the decision, since it would likely still prefer to offer a dual brand online option. We believe OPAP is likely to acquire one of the new licences following the proper regulation of the market ahead.
Forecasts: FY20 and FY21 EPS upgrades due to tax changes
Our revenue forecasts remain broadly unchanged, although we have slightly lowered our FY20 and FY21 EBITDA forecasts to be more conservative on costs. Our FY20 and FY21 EPS go up by c 4.5% and 2.8%, largely due to lower corporate tax in Greece (the effective rate goes from 29% to 24%).
OPAP reported Q219 net debt of €485m (€550m post-IFRS 16) and the net debt/LTM EBITDA was 1.2x. Post IFRS 16, we forecast net debt of €474m in FY19 which is lower than our previous estimate of €494m, largely due to the lack of interim dividend in the period. We forecast net debt of €606m at FY20, which includes the €94m investment in Stoiximan, as well as the extraordinary dividend.
Exhibit 1: Estimate changes
GGR (€m) |
EBITDA (€m) |
Normalised EPS (€) |
|||||||
Old |
New |
% chg. |
Old |
New |
%chg. |
Old |
New |
%chg. |
|
2019e |
1,635.0 |
1,635.0 |
0.0 |
408.7 |
408.9 |
0.0 |
0.60 |
0.62 |
3.3 |
2020e |
1,845.0 |
1,833.0 |
(0.6) |
465.0 |
456.7 |
(1.8) |
0.66 |
0.69 |
4.5 |
2021e |
1,897.1 |
1,884.6 |
(0.6) |
489.3 |
480.6 |
(1.8) |
0.70 |
0.72 |
2.8 |
Source: Edison Investment Research estimates
Exhibit 2: Financial summary
€'m |
2014 |
2015 |
2016 |
2017 |
2018 |
2019e |
2020e |
2021e |
||
31-December |
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 |
1,635.0 |
1,833.0 |
1,884.6 |
NGR |
|
|
973.1 |
987.7 |
930.8 |
972.9 |
1,039.9 |
1,101.9 |
1,233.4 |
1,268.7 |
Cost of Sales |
(764.2) |
(774.3) |
(827.5) |
(862.9) |
(904.3) |
(947.0) |
(1,029.9) |
(1,053.3) |
||
Gross Profit |
613.5 |
625.3 |
570.1 |
592.6 |
642.7 |
688.0 |
803.1 |
831.4 |
||
EBITDA |
|
|
346.5 |
377.1 |
307.5 |
306.5 |
353.6 |
408.9 |
456.7 |
480.6 |
Normalised operating profit |
|
|
289.6 |
318.1 |
252.4 |
218.8 |
258.4 |
296.6 |
329.0 |
351.1 |
Impairments |
7.5 |
(14.1) |
0.0 |
(2.7) |
(17.5) |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
7.9 |
0.0 |
0.0 |
||
Share-based payments |
(0.9) |
(1.2) |
(3.1) |
(1.5) |
(1.6) |
(1.7) |
(1.7) |
(1.7) |
||
Reported operating profit |
296.2 |
302.8 |
249.3 |
214.6 |
239.3 |
302.8 |
327.3 |
349.5 |
||
Net Interest |
1.6 |
(4.7) |
(13.3) |
(21.1) |
(23.5) |
(25.3) |
(29.1) |
(30.7) |
||
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
6.6 |
0.0 |
0.0 |
||
Other |
7.8 |
1.5 |
1.0 |
(0.3) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
299.0 |
314.9 |
240.0 |
197.5 |
234.9 |
277.9 |
299.9 |
320.4 |
Profit Before Tax (reported) |
|
|
305.6 |
299.6 |
236.9 |
193.2 |
215.9 |
284.1 |
298.2 |
318.8 |
Reported tax |
(106.4) |
(89.7) |
(64.1) |
(61.6) |
(70.6) |
(84.4) |
(72.0) |
(76.9) |
||
Profit After Tax (norm) |
212.3 |
223.6 |
170.4 |
140.2 |
166.8 |
198.2 |
227.9 |
243.5 |
||
Profit After Tax (reported) |
199.2 |
209.9 |
172.9 |
131.6 |
145.3 |
199.7 |
226.3 |
241.8 |
||
Minority interests |
(4.2) |
0.8 |
(2.6) |
(5.4) |
(2.0) |
0.3 |
(6.3) |
(6.9) |
||
Discontinued operations |
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 |
198.4 |
221.6 |
236.6 |
||
Net income (reported) |
195.0 |
210.7 |
170.2 |
126.2 |
143.3 |
199.9 |
220.0 |
234.9 |
||
Basic average number of shares outstanding (m) |
319 |
319 |
319 |
318 |
318 |
322 |
323 |
327 |
||
EPS - basic normalised (€) |
|
|
0.65 |
0.70 |
0.53 |
0.42 |
0.52 |
0.62 |
0.69 |
0.72 |
EPS - diluted normalised (€) |
|
|
0.65 |
0.70 |
0.53 |
0.42 |
0.52 |
0.62 |
0.69 |
0.72 |
EPS - basic reported (€) |
|
|
0.61 |
0.66 |
0.53 |
0.40 |
0.45 |
0.62 |
0.68 |
0.72 |
Dividend (€) |
0.70 |
0.40 |
1.29 |
1.10 |
0.70 |
1.24 |
0.92 |
0.96 |
||
Revenue growth (%) |
1.6 |
(-0.2) |
4.1 |
6.3 |
5.7 |
12.1 |
2.8 |
|||
Gross Margin (%) |
44.5 |
44.7 |
40.8 |
40.7 |
41.5 |
42.1 |
43.8 |
44.1 |
||
EBITDA Margin (%) |
25.2 |
26.9 |
22.0 |
21.1 |
22.9 |
25.0 |
24.9 |
25.5 |
||
Normalised Operating Margin |
21.0 |
22.7 |
18.1 |
15.0 |
16.7 |
18.1 |
17.9 |
18.6 |
||
BALANCE SHEET |
||||||||||
Fixed Assets |
|
|
1,343.4 |
1,318.9 |
1,330.3 |
1,356.5 |
1,384.2 |
1,393.7 |
1,379.3 |
1,268.1 |
Intangible Assets |
1,284.2 |
1,237.2 |
1,231.0 |
1,218.5 |
1,157.2 |
1,104.1 |
1,070.5 |
987.7 |
||
Tangible Assets |
44.2 |
56.2 |
67.6 |
109.3 |
111.5 |
168.6 |
187.7 |
159.4 |
||
Investments & other |
15.0 |
25.5 |
31.7 |
28.7 |
115.5 |
121.0 |
121.0 |
121.0 |
||
Current Assets |
|
|
409.4 |
389.9 |
437.4 |
440.4 |
385.5 |
439.8 |
507.1 |
500.5 |
Stocks |
3.0 |
4.2 |
12.5 |
7.9 |
10.7 |
12.7 |
17.7 |
22.7 |
||
Debtors |
92.3 |
55.2 |
80.6 |
127.8 |
138.3 |
133.3 |
128.3 |
123.3 |
||
Cash & cash equivalents |
297.4 |
301.7 |
273.5 |
246.1 |
182.6 |
243.8 |
311.1 |
304.5 |
||
Other |
16.7 |
28.8 |
70.8 |
58.5 |
54.0 |
50.0 |
50.0 |
50.0 |
||
Current Liabilities |
|
|
(457.9) |
(325.0) |
(390.2) |
(482.0) |
(299.3) |
(303.5) |
(288.5) |
(273.5) |
Creditors |
(170.4) |
(127.1) |
(149.3) |
(173.9) |
(176.7) |
(146.7) |
(131.7) |
(116.7) |
||
Tax and social security |
(178.2) |
(129.9) |
(55.5) |
(89.8) |
(8.6) |
(13.6) |
(13.6) |
(13.6) |
||
Short term borrowings |
(0.0) |
(32.1) |
(118.7) |
(169.2) |
(0.2) |
(7.2) |
(7.2) |
(7.2) |
||
Other |
(109.3) |
(35.9) |
(66.7) |
(49.2) |
(113.8) |
(136.0) |
(136.0) |
(136.0) |
||
Long Term Liabilities |
|
|
(59.8) |
(181.0) |
(305.3) |
(556.7) |
(710.8) |
(792.1) |
(992.1) |
(892.1) |
Long term borrowings |
0.0 |
(115.0) |
(263.0) |
(513.1) |
(650.3) |
(710.3) |
(910.3) |
(810.3) |
||
Other long term liabilities |
(59.8) |
(66.0) |
(42.3) |
(43.6) |
(60.6) |
(81.8) |
(81.8) |
(81.8) |
||
Net Assets |
|
|
1,235.1 |
1,202.8 |
1,072.2 |
758.2 |
759.5 |
737.8 |
605.7 |
603.0 |
Minority interests |
(67.4) |
(41.0) |
(37.0) |
(43.4) |
(36.8) |
(38.0) |
(42.0) |
(44.0) |
||
Shareholders' equity |
|
|
1,167.7 |
1,161.8 |
1,035.3 |
714.8 |
722.8 |
699.8 |
563.7 |
559.0 |
CASH FLOW |
||||||||||
Op Cash Flow before WC and tax |
347.4 |
378.3 |
310.7 |
308.0 |
355.2 |
410.6 |
458.3 |
482.3 |
||
Working capital |
7.0 |
(41.0) |
(71.9) |
(9.2) |
(25.0) |
(25.0) |
(10.0) |
(10.0) |
||
Exceptional & other |
1.0 |
9.1 |
(12.4) |
(0.4) |
1.1 |
(4.3) |
0.0 |
0.0 |
||
Tax |
(68.8) |
(142.5) |
(116.9) |
(31.4) |
(51.7) |
(74.4) |
(62.0) |
(66.9) |
||
Net operating cash flow |
|
|
286.6 |
203.9 |
109.4 |
266.9 |
279.6 |
306.8 |
386.4 |
405.4 |
Capex |
(18.6) |
(39.6) |
(42.9) |
(96.3) |
(51.9) |
(30.0) |
(20.0) |
(20.0) |
||
Acquisitions/disposals |
(18.6) |
(0.8) |
(0.0) |
(31.5) |
(47.9) |
(22.0) |
(94.9) |
0.0 |
||
Net interest |
1.6 |
(4.2) |
(11.9) |
(19.6) |
(24.6) |
(25.3) |
(29.1) |
(30.7) |
||
Equity financing |
(8.3) |
(24.2) |
(11.9) |
(1.8) |
(5.5) |
0.0 |
0.0 |
0.0 |
||
Dividends |
(79.8) |
(277.3) |
(292.8) |
(446.1) |
(154.0) |
(168.4) |
(368.8) |
(254.4) |
||
Other |
48.1 |
(0.7) |
(12.7) |
0.3 |
(18.6) |
0.0 |
(6.3) |
(6.9) |
||
Net Cash Flow |
211.0 |
(142.9) |
(262.8) |
(328.0) |
(22.8) |
61.1 |
(132.7) |
93.4 |
||
Opening net debt/(cash) |
|
|
(86.4) |
(297.4) |
(154.5) |
108.3 |
436.2 |
467.9 |
473.7 |
606.4 |
FX |
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) |
(67.0) |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
(297.4) |
(154.5) |
108.3 |
436.2 |
467.9 |
473.7 |
606.4 |
513.0 |
Source: OPAP accounts, Edison Investment Research estimates
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|
Research: Investment Companies
Fidelity Special Values (FSV), launched in November 1994, is celebrating its 25-year anniversary. Manager Alex Wright has a contrarian investment style, aiming to generate long-term capital growth from a diversified portfolio of primarily UK equities (up to 20% of the fund may be held in companies listed overseas). The manager seeks undervalued companies with the potential for positive change. He says the UK market is relatively attractively valued versus global stocks and, in an environment of softening company fundamentals, he is finding opportunities in more defensive businesses. FSV has a strong investment performance track record; its NAV total returns are ahead of the FTSE All-Share index over the last three, five and 10 years. Although the last 12 months have proved more challenging, Wright has confidence in the trust’s future prospects.