London, UK, 16 June 2021

OPAP (OPAP): Fast Forward to growth and higher returns

OPAP is Europe's only listed gaming operator with 100% pre-paid exclusive retail licences, which provide significant barriers to entry and relatively secure recurring cash flow. Prior to COVID-19, management delivered consistent revenue growth from product enhancements and profit growth was further helped by managing operating costs. The company looks well placed to deliver strong revenue growth as it recovers post COVID-19, and its exposure to faster growing businesses, including online, increases. The new CEO's strategy, Fast Forward, aims to grow the brands and customer interactions while maintaining OPAP's leading corporate and social responsibility credentials. We expect OPAP to continue its dividend policy of paying out the bulk of free cash flow and estimate a dividend yield of 5.8% in FY21 and 9.1% in FY22.

The share price has performed well in response to the favourable licence extension and in anticipation of a clearer path to recovery post COVID-19 and greater growth with Stoiximan. OPAP continues to trade at a discount to its quoted peers and the prospective yield of 5.8% in FY21 and 9.1% in FY22 looks attractive given the strong balance sheet. Our DCF indicates a valuation of €16.6 per share.

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