GVC Holdings: Excellent Interim Results
Edison | Sep 20, 2016 04:12AM ET
GVC Holdings PLC’s (LON:GVC) interims demonstrate the rapid progress it is making integrating bwin, with proforma EBITDA up 42%. In a confident statement management believes the group’s organic growth potential is greater than originally anticipated; it plans to increase marketing investment to take advantage of new opportunities. Our EPS estimates have increased, as has our 2016 EBITDA forecast (up 3%), but our 2017 EBITDA is unchanged to allow for regulatory and tax headwinds. Management is delivering on its ambitious targets yet the 2017e EV/EBITDA is below the peer group average at 10.1x.
Reaching milestones ahead of schedule
Bwin synergies are coming through slightly ahead of target and management is confident that the integration will be complete by end Q217 and full €125m of cost savings secured. With both GVC and bwin labels delivering H116 top-line growth, marketing cost is to be increased from the current 21% of revenues, with plenty of scope for revenue synergies through improved cross-selling. Meanwhile the senior management team has been strengthened, product enhancements are underway, the New Jersey gaming licence has been confirmed and a B2B deal with Betfred (the UK’s fourth-largest bookie) demonstrates the value of the group’s IP.
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