JPJ Group plc - Global growth keeps profits intact
JPJ Group plc (JPJ’s) Q2 headline numbers were in line with our expectations, with growth in international markets offsetting weaker UK revenues. The company remains competitively well positioned across all its key markets and is highly cash generative. JPJ has signed a share purchase agreement for the sale of the social business for £18.1m cash, which we estimate had annual revenues of £12m and EBITDA of £3.5m. We have adjusted our EBITDA to reflect the sale, but our profit forecasts would otherwise have been broadly unchanged. The stock continues to trade at a meaningful discount to peers, at 9.8x EV/EBITDA and 8.2x P/E for FY19e.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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