EUR 300.00 For Business Accounts Only

OPAP | Total return game

H1 ended with OPAP delivering 5.7% GGR growth, while enjoying accelerated revenue momentum in Q2 on improved core games. The resulting 26% H1 EBITDA growth – underpinned by higher revenues as well as opex savings – certainly corroborates our FY19e for organic EBITDA growth of c14% (€411m excl. Stoiximan) lending weight to the view that earnings estimates in the near-term are quite realistic. Looking ahead, we still expect strong EBITDA growth rates to solidify in 2020e (c9% organic) by virtue of the rising contribution from VLTs, product innovation and accelerated cyclical momentum. Taking into account the profitability contribution from the upcoming consolidation of Stoiximan (we assume from Q4’19), we estimate group EBITDA near €470m in 2020e, with OPAP featuring among the EU gaming companies with the strongest 3-year profit outlook.

On the dividend front, the capital-light nature of the business model and the fact that all licence payments have been made leave plenty of scope for continuation of the generous dividend policy and paving the way for DPS >€0.8 on an annual basis (>9% yield). OPAP’s recently instituted scrip dividend program also facilitates the continuation of a high dividend policy, especially as participation in the future will most likely be more than the c14% participation observed in July 2019.

In this note we are making minor changes to our estimates (mainly to reflect different phasing-in assumptions for VLTs this year), while raising slightly our PT to €11.8 (as we roll this forward to Sep 2020). We reiterate OPAP as a core holding in Greece, in the context of the sustainable high dividend-paying capacity and the tax-related hidden value – worth >€2 per share – related to the prepayment of gaming duty. We expect the latter issue to come to the forefront in the coming months, in view of the transition to the new tax regime in end 2020.