OPAP: Tailwinds continuing (stays BUY)

We maintain our BUY rating on OPAP and increase our 12M price target (PT) to EUR 12.9/share (from EUR 11.60), due mainly to the continuing positive changes on the regulatory front. First, we underline the new law on VLTs, prolonging OPAP’s licence by 80% to 18 years at the expense of a 29% cut in the number of machines, which we see rather as an admission of reality than the real limit. Secondly, we underline the visible intensification of the Greek authorities’ efforts to curb the grey market, in both the online gambling and slot machines segments. On the other hand, we have trimmed our 2017-20E EBITDA forecasts by up to 10% to address the rising costs of marketing and IT, and the lower number of VLTs. Still, on our updated forecasts, OPAP is trading at a 2019E EV/EBITDA of 8.4x, just 5% above its peers’ average, whereas its 2018E dividend yield of 5.9% is strongly above its 3.4% peers’ average. OPAP remains our top pick within our Greek non-financial universe.