EUR 150.00 For Business Accounts Only

OPAP | First thoughts: Robust and in line; toughening comps ahead

In line quarter; comps to get tougher in H2 – OPAP has reported results in line with our projections delivering 8% revenue growth (to €595m) and 9% higher EBITDA (to €207m). In general, Q1 looks in symphony with the recent experience, namely strong online growth (+20%, powered by Stoiximan) and healthy retail (+4%). Across the verticals, betting (+13%, helped by strong sports margins) and online casino (+20%) stood out. We remind that the quarter benefited from favourable sports results and the record Tzoker jackpot. The 9% EBITDA growth filtered through to similar growth in net profit, which settled at €123m, in sync with our number.

Guidance reiterated; outlook to be refreshed at the next set of results – Despite the robust start to the year, mgt has opted to reiterate the conservative outlook for single digit top line growth in FY25, awaiting data points from Q2 and Q3, which cycle tough comps (revenue +7% and +18% respectively). In essence, the guidance would imply flattish to slightly negative yoy top line run rates in the remainder of the year. On the profit front, the guide for c35% EBITDA margin in FY25 would correspond to anything between a small decline to a small increase in EBITDA in the full year (€810-845m), by our math. Consensus is already at the high end, namely at €842m.

Share price overshooting, likely benefiting from flows and rotation to Europe – OPAP shares have popped c14% since Liberation day, being among the outperformers within our GR universe. Underpinning this move has been a confluence of factors, incl. OPAP’s defensive appeal (high divi, low risk) in a volatile landscape, the material profit beat delivered in FY24 (which also underpins FY25e), the rotation to EU assets in the light of the reversal of the US exceptionalism theme, and the rising allocation to Greek equities given the country’s solid investment case (low relative valuations, potential inclusion in the MSCI watchlist for ug to Developed market status, high single digit loan growth, >2% economic expansion). That said, the runway for further capital appreciation looks exhausted in our view, since OPAP’s core concession has a decaying face value as it runs down to expiry in 2030. This is because the FCF from this concession will likely get debased from 2030 onwards, assuming the cash gaming duty goes to a “normal” 30-35%. To reinstate duration in the equity story, OPAP must secure visibility on the concession extension and its terms, but we do not see this happening in the near term.

Valuation – We value OPAP via a SOTP of its concessions based on 7.3% WACC. Our (ex-div) PT (slightly lifted to reflect the roll-over of our valuation to June 2026) implies a 2025 EV/EBITDA of c8.7x, modest premium vs OPAP’s historic average justified by the better cash generation profile until 2030. Despite the high single digit dividend yield with limited risk, we see the stock as fully valued, with the price driven more by momentum rather than residual value. Indicatively, on our estimates the current price seems to factor in: 1) both a low licence renewal cost for the core concession and a low cash gaming duty (near 20% post 2030); or 2) alternatively, mid single digit growth in group EBITDA on a sustainable basis (vs low single digit included in our numbers), thanks to a material channel shift to online (to c45% in 2030 from 30% in 2024).