Edison Investment Research - 32Red PLC Upping its game

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Edison Investment Research

Upping its game

32Red’s brand punches above its weight in the UK online casino market. Management has adopted a more aggressive stance since mid-2015, both in terms of marketing and with the highly accretive £8.4m Roxy Palace acquisition. Interims show H116 EBITDA rising to £4.5m (H115: £1.2m) and we initiate with forecast EPS more than doubling in 2016 and growing by over 65% between 2016 and 2018. Yet the 2016e P/E is only 13.5x and our peer group comparison and DCF suggest a value of 193-247p per share, 46-86% above the current share price.

21/09/2016 14 EN

Underlying

32Red PLC

32Red is an online gaming operator. Co. operates an online casino, 32Red.com; as well as a poker room, 32RedPoker.com; an online bingo destination, 32RedBingo.com; and a sports betting brand, 32RedSport.

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GI000A0F56M0 Gibraltar

Provider

Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

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Other Reports on these Companies

Edison Investment Research

Kindred spirits

Kindred Group’s all cash offer for 32Red marks a meaningful and well-priced entry into the UK online casino market. With robust FY results and 20% growth in Q117 net gaming revenues, our standalone 32Red forecasts are largely unchanged, underpinned by continued margin expansion and high cash generation. Within an enlarged group, there should be additional revenue and cost synergies, suggesting upside to our numbers. Consideration is expected to be paid in mid/late May.

March 13, 2017 March 13, 2017 7 EN

Edison Investment Research

Acceptance of all-cash offer by Kindred Group

32Red has agreed an all cash takeover by Kindred, at 196p per share. Together with an approved 4p dividend, this represents a 32.4% premium to last month’s average. This equates to 10.6x EV/EBITDA and 14.3x P/E for 2017, a small premium to the larger peer group. Given 32Red’s brand strength, regulated bias and growth momentum, this appears justified.

February 23, 2017 February 23, 2017 2 EN

Edison Investment Research

Confident start to 2017

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Upping its game

Kindred spirits

Acceptance of all-cash offer by Kindred Group

Confident start to 2017

Games Workshop Group - A notable acceleration in Q225

Altron - Further margin expansion in H125

Sayona Mining - Catching up with majors

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