iGaming Business magazine iGB 112 Sept/Oct 2018 | Page 117

Finance
RP Index components
Stock Channel Type Exchange Shares Online mix Online mix US$ ex-rate
888 Holdings Online only B2C LSE 359.7 100% GBP 1.29
Aspire Global Online only B2B NN 44.4 100% SEK 0.11
Bet-at-home Online only B2C FSE 7.0 100% EUR 1.16
Betsson Online only B2C SSE 122.1 100% SEK 0.11
Boyd Gaming Omnichannel B2C NYSE 112.3 1% USD 1.00
Caesars Omnichannel B2C NASDAQ 147.0 1% USD 1.00
Churchill Downs Omnichannel B2C NASDAQ 16.6 33% USD 1.00
Codere Omnichannel B2C BDM 118.4 1% EUR 1.16
Evolution Gaming Online only B2B SSE 36.0 100% SEK 0.11
Gamenet Group Omnichannel B2C MSE 30.0 8% EUR 1.16
Gaming Realms Online only B2C LSE 284.4 100% GBP 1.29
GAN Online only B2B LSE 85.5 100% GBP 1.29
GiG Online only B2C OSE 895.7 100% NOK 0.12
GVC Omnichannel B2C LSE 578.3 52% GBP 1.29
IGT Omnichannel B2B NYSE 203.5 2% USD 1.00
Inspired Entertainment Omnichannel B2B NASDAQ 21.5 10% USD 1.00
Intralot Omnichannel B2B ASE 157.0 20% EUR 1.16
JPJ Online only B2C LSE 74.3 100% GBP 1.29
Kambi Omnichannel B2B SSE 30.0 100% SEK 0.11
Kindred Group Online only B2C SSE 230.1 100% SEK 0.11
LeoVegas Online only B2C SSE 99.7 100% SEK 0.11
MRG Online only B2C SSE 40.9 100% SEK 0.11
Nektan Online only B2B LSE 47.4 100% GBP 1.29
NetEnt Online only B2B SSE 206.5 100% SEK 0.11
OPAP Omnichannel B2C ASE 319.0 5% EUR 1.16
Paddy Power Betfair Omnichannel B2C LSE 82.4 80% GBP 1.29
Penn National Gaming Omnichannel B2C NASDAQ 83.5 1% USD 1.00
Playtech Omnichannel B2B LSE 317.0 40% GBP 1.29
Rank Group Omnichannel B2C LSE 390.7 15% GBP 1.29
Scientific Games Omnichannel B2B NASDAQ 87.6 8% USD 1.00
Sportech Omnichannel B2C LSE 186.8 10% GBP 1.29
Stars Group Online only B2C TSE 272.0 100% CAD 0.77
Stride Gaming Online only B2C AIM 75.8 100% GBP 1.29
Tabcorp Omnichannel B2C ASX 2013.0 35% AUD 0.72
William Hill Omnichannel B2C LSE 860.6 43% GBP 1.29
Finally, RP has developed a thesis that mature market growth is much
more mass-market and content driven. This means it requires a different
approach than the historical one of ‘benchmark product and then turn
on the marketing tap’. Within our index, we see only six such companies:
SBG within Stars, Evolution (B2B), LeoVegas, MRG, Gaming Realms
and GiG. Each of these , however, has had its operational and (relative)
growth issues recently, while at least two are not yet fully proven in terms
of achieving consistently profitable growth. In our view, the fact that only
about 13% of the index is operationally growth positioned could prove a
challenge to the strategic hopes of many constituents.
Stock in focus: William Hill
We focus on William Hill for this edition because it captures all of the
key drivers discussed above. The relief of knowing government policy
“Most companies reported broadly in-line Q3 results,
but most were aggressively sold off
regardless. It should be noted
that this was a largely gambling-
specific phenomenon”
on gaming machines, however bad, combined with a John-the-Baptist-
like position in the US drove 17% share gains in ‘momentous week’.
However, enthusiasm wore off as other companies busied themselves
with deals (particularly rivals PPB and GVC) while Hills looked
relatively left behind. Equally, while H1 results were solid enough
there was nothing of the double-digit growth that gets investors’ pulses
racing – and the US made no money at all due to the costs of PASPA
positioning (possibly well spent, but we don’t know yet). All this has left
William Hill lower than where it started (see Chart 3). The knowns are
negative and relatively current: swingeing £2 cash flow impact and
a difficult UK growth environment across channels. The unknowns
might be positive (US potential, operational turnaround beyond
market share stability, M&A) but that is just it – they are unknown.
And the market doesn’t like waiting…
Disclaimer
The narrative provided represents the opinions of the authors. Any
assessment of trends or change is necessarily subjective. The information
and opinions provided are not intended to provide legal, accounting,
investment or policy advice, nor should they be used as a forecast. Regulus
Partners may act, or have acted, for any of the companies and other
stakeholders mentioned in this report.
i GamingBusiness | Issue 112 | September/October 2018
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