OPAP - A good end to FY23

OPAP enjoyed good growth from its land-based activities, as well through the continued expansion of its online activities in FY23, and it surpassed its own profit expectations. Ongoing enhancements to OPAP’s offer, including the revitalisation of games, will support further growth in FY24.

OPAP - Short-term challenges in Q323

OPAP’s Q323 results were negatively affected by industry-wide influences in sports betting, a tough comparative for Lotteries, and one-off natural events, which have led to a minor, c 3%, tweaking to management’s prior FY23 EBITDA guidance. From an operational perspective, the new iLottery platform is building awareness and growing revenue, and player activity increased on the OPAP Store app, while the retail offer continues to evolve.

Tail-risks weigh on Q323 earnings

OPAP reported softer-than-expected Q323 numbers as revenue declined by 3.6% YoY, with the weakness in lottery and betting being only partly offset by growth in VLTs and online casino. However, with many operators flagging similar weakness over the last few weeks, investors took the soft showing in their stride, sending the stock 3% higher following the announcement (at pixel time). Given our conservative approach to earnings ahead of this report, we expect a minor upgrade to our estimates.

OPAP - Strategy delivering incremental growth

OPAP’s management is successfully executing its strategy of growing the core brands and customer interactions online and offline, as evidenced by increasing online exposure and revitalising growth in its mature retail core activities, while maintaining its leading corporate and social responsibility (CSR) credentials. Its exclusive licences in the majority of its activities enable high levels of profitability, cash generation and shareholder returns. We see attractive upside to our DCF-based val

Solid dividend complements an all-round Q2 23 showing

OPAP exceeded Q2 23 estimates with a 12.7% revenue increase to €498.1m, driven by growth across all product categories and channels. H1 23 revenue rose by 14%. Adjusted EBITDA grew by 5.1% (Q2) and 8.9% (H1), while reducing financial expenses underpinned a 12.2% rise in net profit. The company declared an interim dividend of €1/share, meeting its annual commitment, and announced a €150m share buy-back programme. We will upgrade our estimates by mid-single-digits to reflect the strong update.

OPAP - Revenue growth and margin leverage in Q123

OPAP’s Q123 results demonstrated continued strong growth in revenue, helped by improvements to both the retail and online product offering, and profits, with the support of a more favourable macroeconomic background as inflation has declined. The ongoing rejuvenation of the gaming offer is leading to growing player engagement and frequency of use. Management’s unchanged guidance for FY23 looks well-supported. The valuation and dividend yield (9.1%) look attractive relative to the peers.

FY23 is off to a good start

OPAP reported a strong start to 2023. Q1 23 revenue came in at €527.4m, up 15.4%, while the EBITDA margin came in at a strong 37.2%. While the top-line momentum was attributable to broad-based growth, margins (+30bps YoY expansion) benefitted from good opex control. Following the strong start to the year, we will upgrade our FY23 estimates by high-single digits. Hence, we re-iterate our positive stance on the stock.

OPAP - FY22 profit and cash returns exceed estimates

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

Broad-based momentum in Q422 supports an encouraging outlook

OPAP reported Q4/FY22 revenue of €540.9m/€1,939m, up 8.5%/26% YoY, respectively, led by growth in VLTs, online casino, and Instant & Passives. EBITDA came in at €202.7m/€736m, with margins (+330bps/+220bps for Q4/FY, respectively) benefiting from good cost control. The firm announced total shareholder returns of €1.45/share, with €1/share in dividends and €0.45/share as a special dividend. We will upgrade our estimates, largely due to the stronger than expected margins and re-iterate our positiv

Q3 22: Online recovery well-complemented by retail stability

OPAP’s Q3 performance was ahead of market expectations. Revenue of €498.8m (+2.0% vs consensus) was up 6.1%, with the flattish showing in retail more than offset by ~29% growth online. Operational leverage and good cost control resulted in a 240bps EBITDA margin expansion. Management expects a strong finish to FY22, guiding for EBITDA of €720m (vs €700m earlier). We will trim our top-line estimates, but upgrade our margin estimates. Hence, we re-iterate our positive stance on the stock.

OPAP - Resilience prompts FY22 EBITDA upgrade

OPAP’s strategy of greater product innovation, and the resilience of retail revenue despite increased pressures on consumer spending, drove solid revenue growth in Q322. Ongoing cost control led to an impressive improvement in profitability, enabling management to increase its FY22 EBITDA guidance back towards prior guidance from the start of the year (€720m). Despite the relatively strong share price performance in the last 12 months, the prospective FY23 P/E multiple of 10.9x is a 15% discount

OPAP - ‘Hefty’ retail recovery

OPAP’s Q222 results highlighted a continued strong recovery in revenue, profitability, helped by cost containment, and cash generation following the disruption caused by COVID-19-related lockdowns and restrictions. The growth was driven by its land-based activities (easier comparative), while its online revenues normalised (tougher comparative). A more cautious macroeconomic outlook led management to trim its FY22 EBITDA guidance by 4%. The company’s strong financial position means it is well pl

Q2 22: retail, VLTs offset expected online decline

OPAP reported mixed Q2 22 numbers, missing top-line estimates, but beating on the bottom line, thanks to good cost control – a big positive given the inflationary market environment. Growth was attributable to the VLT (+106.4%) and retail recovery (+10.2%), which was partially offset by the expected broad-based decline in online revenue. Though the top-line miss suggests otherwise, the economic resilience of lottery makes OPAP an unlikely defensive play. We re-iterate our positive stance on the

Well positioned for future success

Strong performance against tough market conditions

Initial Equity Trading Comments - 19 February 2024

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Zeus Top Picks for 2024 - 2023 review and outlook for 2024

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Pinewood Technologies (PINE LN) - Driving growth in automotive software

Pinewood’s transition to a pure-play automotive SaaS business is now largely complete. Today we introduce summary forecasts out to FY26 and reiterate the investment case. We see significant opportunity for Pinewood to grow its user base in the UK and internationally whilst generating high EBITDA margins and cash conversion. With a 24.5p special dividend embedded in the current price (payable Q1/Q2), the effective price today is 12.3p. Based on the Group’s FY27 target of £27m EBITDA, we estimate

React Inititation of Coverage

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Hybridan Small Cap Feast - 17 April 24

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Morning Note – 25 September 2023

Morning Note – 5 January 2024