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GVC Holdings

Parliamentary U-turn

Update | Technology | 15 Nov 2018

Following the resignation of Sports Minister Tracey Crouch, the UK government has bowed to pressure to bring forward the reduction in FOBT stake limits, from October 2019 to April 2019. The planned increase in remote gaming duty (from 15% to 21%) will also commence in April. We reduce our FY19 EBITDA by a further GBP 95m and net debt/EBITDA now peaks at 3.0x in FY19. Our FY20 estimates are broadly unchanged.

GVC Holdings

Budget not as bad as feared

Update | Technology | 30 Oct 2018

The Budget has provided long-awaited clarity on a number of gaming-related issues. The implementation of the £2 FOBT stake reduction will begin in October 2019, at the same time as a 600bp increase in remote gaming duty (RGD), from 15% to 21%. This is 1% higher than market expectations, but lower than recent rumours of 25%. We now include a £30m annual EBITDA impact in our forecasts. Also adjusting for an earlier implementation of the FOBT stake limit, we have lowered our FY19e EBITDA by 7%. Our FY20e EBITDA declines by 4%. The stock has fallen c 22% since August and trades at 9.8x EV/EBITDA and 13.0x P/E for FY19e.

GVC Holdings

Q3 trading update shows continued progress

Update | Travel & Leisure | 18 Oct 2018

In a continuation of previous trends, GVC's Q318 trading update has demonstrated strong growth and market share gains across all territories. Total net gaming revenues (NGR) were up 14%, driven by a 28% growth in online NGR. UK retail was only down 2%, helped by a strong FIFA World Cup. The integration of Ladbrokes is progressing well, although GVC has announced that Paul Bowtell (former Ladbrokes CFO) will resign in March 2019. Our estimates remain unchanged, but there is a £20-25m risk to our EBITDA forecasts, following an anticipated increase in remote gaming duty (RGD) at the government's budget on 29 October. The stock has fallen 19% from recent highs and trades at 10.0x EV/EBITDA and 13.0x P/E for 2018e.

GVC Holdings

Strong growth amid integration

Update | Technology | 20 Sep 2018

GVC has announced a strong set of H118 results, with pro-forma net gaming revenues (NGR) increasing 8% to GBP 1,717m, driven by an impressive 18% growth in Online. The integration of Ladbrokes Coral is on track, with an additional GBP 30m capex synergies identified. GVC is now a leading player in the global gaming market and is well placed to continue gaining share across all its key territories. M&A are likely to remain a feature and there is significant potential upside from the US, which is not in our estimates. The stock trades appropriately towards the top of its peer group, at 10.3x EV/EBITDA and 13.5x P/E for 2018e.

GVC Holdings

Bigger and bolder

Update | Technology | 08 Jun 2018

Our updated pro-forma GVC forecasts reflect the increased LCL synergy targets (from GBP 100m to GBP 130m), as well as the new GBP 2 FOBT stake limit. Overall, the investment thesis remains unchanged: GVC’s enlarged business benefits from a highly scalable technology, strong brands and diversified revenue streams. We expect strong FCF to simultaneously drive down debt and return cash to shareholders. Additional upside should come from the opening of the US market, where we anticipate opportunistic expansion. The stock trades appropriately towards the top end of its peer group, at 10.8x EV/EBITDA and 14.2x P/E for FY18e.

Rank Group

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Sector report: | Travel & Leisure | 17 May 2018

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GVC Holdings

Leaping into FTSE 100

Update | Technology | 20 Apr 2018

By acquiring Ladbrokes Coral (LCL), GVC will become a FTSE 100 global gaming business, with pro forma FY18e revenues of GBP 3.4bn. With strong brands, diversified revenues and a superior technology, GVC is well positioned to benefit from increased scale and we anticipate the deal to be highly accretive, due to the GBP 100m+ cost synergies. At this stage, there are still many moving parts to our pro forma estimates, with particular uncertainty surrounding the outcome of the Triennial Review and ultimate FOBT stake limits. Irrespective of the outcome, strong FCF should rapidly drive down leverage, which peaks at 3.2x for a GBP 20 FOBT scenario (2.7x for GBP 2). Assuming a GBP 20 stake limit, GVC trades at 10.7x EV/EBITDA and 13.3x P/E for FY19e, a c 5% and 19% discount to Paddy Power Betfair (PPB).

GVC Holdings

A gaming powerhouse

Update | Technology | 02 Jan 2018

GVC’s proposed acquisition of Ladbrokes Coral (LCL) will create a leading global multi-brand gaming business, with revenues of c GBP 3.3bn. Completion is expected in late Q1/early Q218. 90% of the enlarged group’s revenues will be derived from locally regulated and/or taxed markets. As witnessed by the successful integration of bwin, GVC is well positioned to deliver material synergies and, regardless of the outcome of the triennial review, the company expects double-digit EPS accretion after the first year. GVC has reported consistently impressive results throughout 2017 and its shares trade appropriately towards the top end of the peer group, at 12.8x EV/EBITDA and 16.4x P/E for 2018e. We introduce new forecasts to reflect the disposal of the Turkish business.

GVC Holdings

Termination of coverage

Update | Travel & Leisure | 24 Nov 2017

Edison Investment Research is terminating coverage on GVC Holdings (GVC). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant.

GVC Holdings

Exuding confidence - upgrades to come

Flash note | Travel & Leisure | 14 Sep 2017

GVC’s H117 results were accompanied by a bullish update for Q317 and positive future indicators. Underlying 20% daily NGR growth in Q317 (to 10 September), combined with continued synergies from the bwin acquisition, should lead to upgrades in consensus estimates. The company is ambitious and well positioned as a consolidator in the gaming industry. Accretive M&A is highly likely in our view. The stock trades appropriately towards the top of its peer group, at consensus 2018e 9.4x EV/EBITDA and 12.9x PE respectively. Our forecasts are currently under review.

GVC Holdings

Full steam ahead

Update | Travel & Leisure | 06 Jul 2017

Excluding Euro 2016 revenues, underlying Q217 daily net gaming revenues (NGR) grew 15%, providing further evidence of GVC’s position as a leading online gaming operator. As showcased during a recent capital markets day, the integration of bwin.party has surpassed management’s initial expectations, with positive KPIs across all divisions. Growth has been achieved through leveraging the powerful proprietary platform and reinvigorating leading brands. Customer migrations should be complete by year end and EUR 125m cost synergies are on track. We have nudged up our 2017 and 2018 forecasts, although we recognise that comparatives into H217 will become tougher. With a robust growth profile, the stock trades towards the top of its peers, at 9.9x EV/EBITDA and 12.5x P/E for 2018e.

GVC Holdings

Integration paying dividends

Update | Travel & Leisure | 03 Apr 2017

With the successful integration of bwin, GVC's FY16 pro forma results delivered strong 9% net gaming revenue (NGR) growth and high underlying cash flow generation. 2017 has started well: group NGR is up 15% ytd, €125m cost synergies are on track and GVC has announced a second special dividend (15.1c). The group's combined scale and diversification has significantly reduced risk, with 69% of revenues derived from regulated and/or taxed markets. The stock trades at 10.5x EV/EBITDA and 14.7x P/E for 2017e, at the top end of its broader peer group.