Edison Investment Research - Rank Group PLC (RNK) - Mecca digital picking up growth

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Edison Investment Research

Victoria Pease

- Mecca digital picking up growth

The 19% growth in digital revenue is the key highlight in Rank Group’s trading update (16 weeks to 15 October). Grosvenor digital was up 34% and, encouragingly, Mecca digital has moved to double-digit growth (up 11% vs 2% in FY17). In a continuation of previous trends, Venues l-f-l revenues declined by 1%, leading to a 2% l-f-l growth in total group revenues. Notwithstanding the decline in Venues, the core business is highly cash generative, enabling progressive dividends, as well as potential M&A. Rank Group does not face any B2 FOBT risk from the triennial review and may even benefit if it is allowed more machines. Despite this, the stock trades at c 6.8x EV/EBITDA for CY18e. Management reiterated its expectations for the full year and our estimates remain unchanged.

19/10/2017 3 EN

Underlying

Rank Group PLC

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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GB00B1L5QH97 London Stock Exchange United Kingdom

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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Analysts

Victoria Pease

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- Mecca digital picking up growth

Rank Group: 1 director

Rank Group - Recovery potential and operational gearing

RANK GROUP sees an upgrade to Slightly Positive due to a better fundamental star rating

Basilea Pharmaceutica - Cresemba milestone payments continue to roll in

AAC Clyde Space - Solid start to the year with further order growth

Tinexta - Typical seasonality in Q124

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