Playtech delivers solid year as Americas opportunity grows

Playtech (PTEC) delivered a better-than-expected set of annual results on the back of robust performances across both its business-to-consumer (B2C) and business-to-business (B2B) operations, but the legal dispute with joint venture partner Caliente over a call option and fees is dragging on. 

Cash profits were up 12 per cent to €407mn (£349mn) as B2C revenue rose 5 per cent to surpass €1bn for the first time. Revenue at the key Snaitech brand – a leading operator in the Italian market – was up 5 per cent and it delivered 60 per cent of the company's total adjusted cash profits in the year. 

On the B2B side of things, a 46 per cent surge in Americas revenue drove sales up 8 per cent. Key customers in that locale include Caliente's digital division, Caliplay, in Mexico, NorthStar in Canada, and Wplay in Columbia, while the company now has casino licences in 11 US states. 

Chief executive Mor Weizer told Investors' Chronicle that newly regulated Brazil could ultimately become the second-biggest global sports betting market over time, and one of Playtech's biggest B2B revenue drivers. The company is well-positioned for Brazilian growth through its partnerships with Galerabet and other operators. 

Management maintained its medium-term adjusted cash profit targets of €300mn-€350mn for B2C and €200mn-€250mn for B2B. 

One result of the ongoing legal disputes in the English and Mexican courts is that Caliplay hasn't paid Playtech B2B fees since July last year. The company recorded €86.5mn of outstanding fees in revenue as it "has assessed that it is highly probable that the cash will be collected in full in subsequent periods".

The shares trade on just four times EV/Ebitda, a big discount to peers. Leverage is 0.7 times, which sets the company up well for M&A moves. Buy. 

Last IC view: Buy, 456p, 29 Feb 2024