Q2 GGR/EBITDA/Net income came in +13%/+7%/+35% yoy, a run-rate in line with our full year estimates and company’s FY EBITDA target (unchanged). The surprise came from the introduction of a 2YR/E150m share buy-back scheme and the E1.0/share interim dividend (from E0.30 last year), pointing to a 6% yield. Half of this comes from the gains booked from/related to the Betano sale (parent accounts) last year and explains the higher-than-usual interim payment.

’If you cannot explain it simply, then you do not understand it well enough.’’ Testing ourselves, we share our understanding of each Greek investment case we cover within a few lines.
Conclusions: Our base case scenario is materializing, i.e., Mitsotakis administration renewing its mandate and Greece avoiding a recession. Equities have re-rated and are +36% YTD, so now…

What’s new? Q1 GGR/EBITDA/Net income came in stronger than what we expected, with offline (core) GGR rising above pre-pandemic 2019 levels, and closer to the strong Q4 of last year. 1/3 of the pre-tax delta is attributed to financial cost savings, thanks to the cash flow driven/debt deleveraging that has taken place since 2020, with OPAP turning net cash this quarter.

What’s new? Q4/FY results came in line with our estimates and OPAP’s own EBITDA guidance. The positive surprise was the overall payment to shareholders at E1.45/share (we expected E1.35), almost as good as last year (E1.50). Management expects 2023 GGR at E2.06bn-E2.14bn (6%-10% yoy) with EBITDA at E740m-E760m (1%-4% yoy L4L). They also reiterated minimum remuneration policy of E1.0/share.

What’s new? OPAP released Q3 results showing clean GGR/EBITDA/net income at E500m/E198m/E119m or +6%/+14%/+17% yoy with equity cash flow at E180m (annual. FCFE yield at 15% or clean 12.5%). Excluding several in shop restrictions, Q3 is the first L4L yoy post-lockdown quarter, helping us to compare yoy trends. Off-line GGR was flat yoy while on-line GGR went up by a strong +29%. Off-line fatigue is probably why OPAP decided to increase odds in retail fixed odds betting, becoming more competitive vs on-line and aiming to (hoping for) a positive net GGR result.
Forecasts: Q3 growth rates imply significant cost cutting (-8% yoy) and EBITDA margin improvement (+250bps) with the latter at a record 40% (on GGR*). Management brought FY 2022 EBITDA guidance back up to E720m (from E700m). We have fine-tuned our 2022-2025 estimates with the most notable change being FY 2022 EBITDA going up by 3% and slightly above guidance at E728m. The World Cup in Qatar could move betting GGR/EBITDA but this will depend on the actual payout.
Conclusion & Valuation: We reiterate OI and PT of E15.1. Our terminal value in 2030 is based on 1/3 market share. We have worked on valuation scenarios including a renewal of the core license beyond 2030 and up to 2040 with a 15% target IRR license cost. Valuation wise it is not clear if OPAP should renew or simply embrace an opening of the off-line market to competition. Either way, what matters the most is that OPAP will remain a key player in the offline gaming market in Greece.