London, UK, 16 March 2021

bet-at-home (ACXX): Becoming less grey

bet-at-home (BAH) is an established European online sports betting and e-gaming provider. It largely operates in unregulated grey markets that are characterised by strong cash flow, although they also carry commensurately higher regulatory risks. BAH enters FY21 with less regulatory uncertainty than it has for a number of years, as its largest market, Germany (c 36% of revenue) transitions to a fully regulated market. Following better than expected FY20 results we upgrade our FY21 EBITDA estimate by 54%; we now assume some underlying growth from sporting events in FY21 and a more positive outlook for Germany than previously. The dividend yield of 4.1% looks attractive given the strong (net cash) balance sheet.

On our upgraded forecasts, BAH trades at a P/E of 18.7x, which is towards the top of the peers that are not subject to takeover. The dividend yield of 4.1% is attractive relative to the peer group, which is well covered by earnings and looks conservative relative to BAH's free cash flow (FCF) generation and its strong balance sheet with net cash (excluding client money) of €50.9m.

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