OPAP: Endurance race (stays BUY)
In this report, we have adjusted our estimates to reflect the COVID-19 impact on OPAP’s revenues and profitability. We see this year’s revenues witnessing a contraction of 27%, with net profit falling 55% yoy. Nevertheless, given the company’s strong balance sheet and flexible business model (low cash burn, flexibility with revenue-sharing agreements), we believe that OPAP should be able to endure the current headwinds, estimating a strong rebound of 40% yoy in 2021E, which should pave the way for satisfactory returns to shareholders. Our updated forecasts yield a new 12M price target (PT) of EUR 10.6/share, 20% lower than our November 2019 12M PT, but still offering 19% upside potential. In our view, any weakness in the stock price would be a good entry point for those seeking a dividend play with strong fundamentals and high liquidity. We therefore remain BUYers of OPAP.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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