32Red: Another Strong Performance From FY16 Results
Edison | Mar 13, 2017 09:01AM ET
Kindred Group’s (ST:KINDsdb) all cash offer for 32Red (LON:TTRL) marks a meaningful and well-priced entry into the UK online casino market. With robust FY results and 20% growth in Q117 net gaming revenues, our standalone 32Red forecasts are largely unchanged, underpinned by continued margin expansion and high cash generation. Within an enlarged group, there should be additional revenue and cost synergies, suggesting upside to our numbers. Consideration is expected to be paid in mid/late May.
FY Results: another strong performance
32Red’s FY16 results were characterised by 28% revenue growth and a doubling of EBITDA (from £5.2m to £10.6m). With high operational leverage, 32Red’s returns-driven marketing has led to sustained underlying margin expansion and, as the business continues to scale, we forecast 2017 EBITDA of £15.6m (20.4% margin). After the deal, we would expect synergies to provide further upside to our numbers.
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