With betting giants fretting over their exposure to sports events cancelled due to the coronavirus, bingo-led gambling operator Gamesys (GYS) currently appears a relatively safe punt for investors. The re-formatted group came into being following a £490m reverse takeover of assets by JPJ Group (owner of the JackpotJoy brand). The deal included Gamesys' technology platform and content studios, but not its Virgin-branded sportsbook.
Regulatory tightening in Sweden brought European turnover down 13 per cent to £68.6m. The acquisition has taken the group’s leverage up to an adjusted net debt to cash profits multiple of 2.83, which is above its target range of 1-2. Management is targeting a share buyback programme and the launch of dividends. The company will be able to return capital to shareholders if this multiple falls below 2.75, according to Peel Hunt analysts, with a buyback initiative currently appearing more probable.
Gamesys returned to UK revenue growth last year, while its momentum in Japan powered a 137 per cent lift in Asian gaming revenues to £122m.
Peel Hunt forecasts full-year 2020 adjusted pre-tax profits and EPS of £138m and 118p respectively, rising to £151m and 129p in 2021.
| GAMESYS (GYS) | ||||
| ORD PRICE: | 548p | MARKET VALUE: | £ 596m | |
| TOUCH: | 543-554p | 12-MONTH HIGH: | 842p | LOW: 483p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 50 | |
| NET ASSET VALUE: | 428p* | NET DEBT: | 98%** | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 † | 185 | -114 | -188 | nil |
| 2016 † | 267 | -40.7 | -57.0 | nil |
| 2017 † | 289 | -70.0 | -92.0 | nil |
| 2018 | 308 | 19.7 | 26.0 | nil |
| 2019 | 415 | 12.0 | 11.0 | nil |
| % change | +35 | -39 | -58 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £1bn, or 928p a share **Includes lease liabilities of £22.6m, does not include restricted cash of £6.3m. † In Sep 2019 JPJ Group carried out a reverse takeover of Gamesys, whose historical figures cover years 2015-17. | ||||
