OPAP: Cashing in old chips (stays BUY)
In this report, we issue an update on OPAP and remodel our estimates, to account for: 1) the tax prepayment agreement that is now in force; 2) the impact of the second lockdown on the company’s GGR; and 3) the increased stake in Stoiximan (Kaizen). Despite 2020 being quite challenging for the retail space, we believe that 2021E should see a strong rebound for OPAP, on the back of: 1) considerable cash inflows from the tax prepayment agreement; 2) a loaded sportsbook; 3) Stoiximan’s stellar performance; and 4) a more normalised environment. In our view, the company has an attractive investment profile for the medium term, enjoying a domestic monopoly, strong free cash flow generation, a healthy balance sheet and a proven track record in high shareholder remuneration for income investors. The stock is trading currently at a 2021E 9.3x P/E (on reported earnings), with our model yielding 31% upside potential. We remain BUYers, and raise our 12M price target (PT) to EUR 14.0/share.OPAP is engaged in the operating and management of numerical lottery and sports betting games as well as lottery games. Co. holds concession to operate and manage new sports betting games in Greece as well as a right of first refusal to operate and manage any new lottery games permitted by the Hellenic Republic. Co. operates six numerical lottery games, including Joker, Lotto, Proto, Extra 5, Super 3, and Kino; and three sports betting games consisting of Stihima, Propo, and Propo-goal. Co. is also engaged in designing new lottery games, including Bingo and Super 4. Co. distributes its games through an extensive on-line network of agents.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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