Digital revenues are back on track
In line with expectations, l-f-l revenues (46 weeks to 14 May) increased 1%, with a 13% growth in digital offsetting a slight revenue decline in Grosvenor Casinos’ and Mecca’s venues. Earlier platform issues have been resolved and we expect digital revenue growth to accelerate, with the H118 introduction of a single wallet fuelling market share gains. The core business is highly cash generative, enabling progressive dividends, as well as potential M&A. Despite this, the stock trades at a calendar 2017e 6.5x EV/EBITDA, a 30% discount to peers. Our estimates are unchanged.Rank Group is a gaming operator. Co. has four segments: Grosvenor Casinos, which is a casino operator that provides a range of casino table games, including roulette, blackjack, baccarat and poker as well as electric casino and slot machine games; Mecca, which is a bingo operator that provides a selection of games from bingo to a range of slot games, and the venues also have food and drinks, and live entertainment; Luda, which is a community-based gaming brand; and Enracha, which is Co.'s community-based gaming business for the Spanish market that provides community games like bingo as well as electronic casino and slot machine games, sports betting, food and drink and live entertainment.
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