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Allwyn | New name, new game; initiate with a Hold

Bigger platform, thinner visibility – Over the 16 years we have covered OPAP, we have been buyers in most cases, anchored on a clear and repeatable equity story: strong visibility on cash flows, substantial dividend capacity, hidden value from gaming duty dynamics and meaningful licence renewal optionality. The investment case was simple, cash-backed and catalyst-driven. That framework has shifted materially, with the Allwyn group now structurally more complex and more levered. While growth avenues are undeniably wider than before, regulatory exposure has increased (e.g. recent tax increase in Austria, Brazil) & group-level cash generation has become less transparent.

… likely to warrant an elevated risk premium – Besides the above, the recent governance track record — notably the preferred shares episode, the circular valuation uplift embedded in Betano and the valuation balance of OPAP/Allwyn standalone assets envisaged by the merger deal — sets an unfavourable precedent, in our view. Even if defensible on technical grounds, these moves have reshaped investor perception around alignment. We therefore believe the stock is likely to carry a structurally higher risk premium going forward compared with stand-alone OPAP, reflecting greater sensitivity to future capital allocation choices and balance sheet positioning.

Earnings growth: step-change in 2026, mid single digit organic from 2027e – We forecast group net revenues will increase from €4.1bn in 2025 to €5.2bn in 2026e primarily reflecting the first full consolidation of PrizePicks, with organic growth of c6-7% thereafter (through 2029e). We see adj. consolidated EBITDA (incl. investees) being rebased to €1.9bn in 2026e post PrizePicks (€0.4bn) while growing c6-7% organically through to 2029e. We caveat though that several “non-recurring” cash costs will dilute headline adj. EBITDA (and cash flow), with rising net financial costs capping the bottom-line growth despite the adj. EBITDA uplift. On a reported basis, post NCIs, we see net profit rising to c€501m in 2026e and c€772m by 2028e.

Cash flow: 2026 trough, recovery thereafter, but commitments loom – We expect 2026e to mark the cash low point, with Net FCFE turning sharply negative at c€-1.1bn, as c€1.6bn of M&A outflows (PrizePicks) and licence payments (residual in Italy) more than offset the step-up in operating cash flow (c€0.7bn, per our definition). In 2027-28e, we expect cash generation to normalise, with FCFE rebounding near €0.9-1.0bn as capex moderates. That said, the contingent earn-out for PrizePicks (up to $1.0bn) looms as a potential tangible claim on liquidity, while the Greek concession renewal around 2029e is likely to temporarily re-pressurize leverage (we model €0.8bn upfront cost). In short, while headline figures appear on an upward trajectory, there are several items that will dilute cash flow, and are structurally less predictable (e.g. UK-related costs, earnouts, non-controlling interest dividends) than in the legacy OPAP model.

Valuation: repricing leaves the risk-reward balanced – We value Allwyn through a DCF, separating what we deem as pure operating cash flows (excl. investees) from financing inflows (dividend from investees, which we value separately). Using a c10% WACC, we come up with a PT of €13.4. With the market having largely repriced the stock for the higher complexity and more opaque cash generation vs OPAP standalone, we initiate coverage with a Hold rating. Our PT effectively values the stock at c10x 2026e adj. EV/EBITDA, premium vs most other peers but small discount to best-in-class Flutter.