Gamesys Group - Business as usual despite coronavirus
Gamesys Group’s FY19 pro forma results were slightly higher than previous consensus, with revenues increasing by 15% to £565.3m. Asian revenues increased by 137% and now comprise 22% of the total – predominantly from Japan. We are encouraged by the 5% growth in the UK, after a challenging year for the sector. Pro forma EBITDA of £158.9m was 4% lower than the previous year, largely due to higher UK gaming taxes. Following the acquisition of Gamesys, the net debt/EBITDA ratio was 2.8x, which we estimate will fall to 2.0x in FY20 and 1.4x in FY21. The stock trades at 4.1x P/E and 5.2x EV/EBITDA with an estimated 19.8% free cash flow yield for FY21. We note that Gamesys is not exposed to sports and therefore the business should be relatively unaffected by the coronavirus outbreak.JPJ Group is an online gaming holding company. Through its subsidiaries, Co. is engaged in providing bingo, casino and other games to its customers. Co. operates in three segments: Vera&John, which consists of the online casino operations of various brands, including Vera&John and InterCasino; Jackpotjoy, which consists of the real money and social gaming operations of the Jackpotjoy, Starspins, and Botemania brands; and The Mandalay, which consists of the operations of various online bingo websites operated off the Dragonfish platform and the operations of affiliate portal websites.
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