GVC Holdings: A Game Changer
Edison | Jan 19, 2017 04:18AM ET
GVC Holdings PLC's (LON:GVC) positive momentum a year on from the bwin deal is demonstrated by encouraging KPIs and the early resumption of dividends. Attainment of the target €125m of cost synergies is well on track, assuming successful platform migrations during H117. Strong cash generation underpins a generous dividend policy (50% payout). The 2017e EV/EBITDA of only 8.8x looks very good value for an ambitious group that is capitalising on industry growth and consolidation opportunities.
Scale and diversification
GVC’s scale and diversification is a key competitive advantage, as is its proprietary platform. We believe it is now the fourth largest online gambling operator, with 55% of revenues coming from regulated markets (c 70% including taxed and soon-to-regulate). It spent much of 2016 integrating bwin (estimated €55m of synergies achieved by year-end) and putting in place the building blocks for future growth: product enhancements and an impressive line-up of new management. We expect the main platform migrations to be completed by the end of Q217 and while there is some execution risk, management has a depth of experience. Better cross-sell is a key opportunity and GVC began to increase marketing spend in H216.
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