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OPAP | Betting on the “omni-channel ecosystem”

Our new note on OPAP focuses on the online gambling market dynamics and runs through some thoughts regarding how the market might shape in the coming years. We contend that the number of licencees is likely to be limited, we envisage a c76% channeling rate (by 2021e) and argue for relatively low online margins than internationally. We also believe that the prevalence of gaming machines is likely to constrain the overall online gambling penetration, as is the case in other countries where gaming machines are also popular. We expect OPAP to capture a c13% share of the total online market and see the segment more as an opportunity than a threat.

We also emphasize the pivot of OPAP’s strategy towards the player “experience”, with mgt aiming to build an “omni-channel ecosystem” predicated on generating further in-store traffic. We reckon that the focus on traffic as opposed to spending per customer is a strategy that makes sense and we thus continue to see solid profit growth prospects ahead.

Although we have lowered our EBITDA estimates another 3% for 2018e ahead of a not-too-exciting Q3’18, and c6-7% for 2019-20e (driven by lower sportsbetting and more conservative opex savings assumptions), we contend that we are now close to the end of the downgrade cycle. We also reiterate the tax-related hidden value, a matter which we were first to bring to the forefront as early as in January 2018.