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There is very low volume on reported trades, so someone is either filling a large order, transacting off book or playing around with the bid/ask to try and generate some selling. I have now decided that I will hold this regardless of whether there is an offer from TTB or not, as comparing the valuation here to other players like Entain and Flutter, in my opinion, it is now at a deep discount to FV - I expect if no bid comes in it could tank considerably, but there are too many interested parties here for there not to be more bids. I will hold my nerve and see where it take me.
Morning Thunder. At 9.27 this morning Odey Asset Management posted an RNS that yesterday they purchased c.240,000 shares @ £5.23. They bought a similar amount on Friday, adding to their already significant holding. Perhaps they’ve made similar calculations to yourself (well done on those) but why are the shares being marked down when there is more buying than selling?
Good morning
As we await the bid deadline on Friday for the TTB approach, there has been more recent M&A activity in the sector. Here are my opinions on the implications for Playtech:
Recently, MGM announced that it was buying LeoVegas for $607m, equating to 12x EBITDA.
https://wagers.com/news/mgms-leovegas-play-big-deal-with-bigger-implications/
Today, Entain have announced that they are buying BetCity - 'acquisition of BetCity, one of the Netherlands' leading online sports betting ... based on 10x BetCity's EBITDA for the financial year 2023'
So clearly there continues to be very strong demand for betting companies at the moment in the M&A market despite the headwinds in the economy. In fact betting companies are sin stocks, but have very defensive qualities. Playtech announced EBITDA for Q1 of over €100m or circa £84.5m:
https://igamingbusiness.com/playtech-hails-excellent-q1/
If the run rate of Q1 is sustained that would put Playtech on course for adjusted EBITDA of circa £338m for FY22. Now, given there is net debt in the business of circa €600m or £515m (as per 31 Dec 2021 results), an adjustment for the enterprise value should be made in any similar valuation of Playtech. However, we already know that there is an intention to pay down the debt with the Finalto proceeds - which are $250m or £205m, so post completion net debt could stand around £300m.
Taking the average multiple from the recent transactions in the market, 11x EBITDA, playtech FV is £338m x11 less £300m net debt say which equals £3,718 -£300m = £3.4b. This equates to a premium of 112.5% over current price.
At current share price of 519p the market cap is £1.6b, therefore to give the FV of £3.4b I equate this to a share price of 1,103p per share.
So now we really need to see a bid over 800p on Friday IMO or TTB are significantly undervaluing the company.
Good luck all, and DYOR.
Hey, Thunder : don’t know about you, but in 40 years of trading I’ve never experienced anything like this. Any government would be delighted to enjoy such silence smothering its members’ private discussions and negotiations! Good luck to all who have kept their nerve.
Hi Marinella. I think also a lot to do with low volume, market makers certainly play around with the bid/ask on this a lot - although I did see a £40k sell this morning, so perhaps that was the meaning of the dip - regardless as you say, not long to weight to find out if TTB are bidding or not. Interestingly if you go on their website, they have a dedicated tab for Playtech bid and even a website set up for it - I do question why on earth they would go to that trouble and also risk looking rather amateur by not bidding after so much noise..which makes me think a bid will come, but with a twist I am as yet unsure of.
No suggestion of any significant selling by institutional investors or potential bidders: a case of the market hating uncertainty. Over soon…..
Moving towards the next chapter rapidly here, 6 trading days until the deadline lapses. I look at it this way, either they offer 750p or we make more by a sum of parts break up and realise the upside ourselves. Its a no brainer as I said if you look at the EV/Ebitda here vs Entain and Flutter, the other big US exposed players...GL all
your question will be answered by 5 pm on 17 june . I'm convinced an offer of £7.50 will be tabled before then followed by others
Is something about to happen, I sure do hope so...recent share price movements looks promising
https://www.baltictimes.com/estonia_s_online_gambling_success_story___the_history_of_playtech/
Not related but fascinating read
love the way they snook in the april, may update to reaffirm the positive trading, also confirming statement made without knowledge of ttb. put up or shut up . chairman must have had a pop at ceo . i think other parties are waiting to pounce, this company is evolving into a different animal to the one that was when aristocrat came aknocking. if ttb don't win this then the ceo is out of ajob along with his oppo. the finance director .
The Restricted Period ends next Friday, just possibly heralding an update!
The valuation here is starting to look way too low in my opinion. Entain and Flutter both surging today on strong US growth news - they trade off circa 11x and 15x EBITDA by my estimates. If Playtech EBITDA of £100m was maintained over the rest of 2022, that would give £400m, which means we are trading off 3.75x, even if EBITDA comes in the same as last year we are trading way too low in comparison!
https://www.legalsportsreport.com/68955/illinois-sports-betting-license-caliente/#:~:text=Illinois%C2%A0apparently%20is,the%20decision%20today.%E2%80%9D
down 15 to up 10 in 2 hrs. something afoot ?
thanks nr98. good sign for sure.
https://www.investegate.co.uk/article.aspx?id=20220511152200Z6301
about 1m shares at 494p
nr98 where did you get the info. from? cannot see the rns for it
Seems like Marathon has taken a 1+% stake in PTEC....
Not that it means anything but value signalling!
That's a nice narrative but i think in a recession, gambling volumes would take a hit regardless - 2008 fin crisis, casinos saw cc 20% revenue declines. But a software provider should be well buffered as it doesnt have the same op leverage as a b&m casino. But maybe with online gambling pervading, the impact is also dampened given the lower frictional costs to gamble i.e. don't have to travel to a casino etc.
In any case, given the current trading update, it seems like even if there is no bid, the downside should be dampened compared to last year before the whole hoo ha took place. We'll see
I am inclined to step back on board after today's trading update RNS. PTEC looks like a good global business to be in approaching a recession. Sadly people gamble more when poor.
What's worth noting re this bid is that the headline multiple offered by Aris - 11.4x is woefully understated given that they intended to sever EBITDA streams post business review... multiple more like 13-14x. Could argue that the TTM numbers used were pandemic infected and normalized no. would be higher so multiple deserves to be lower. But in any case, a 10x on TTM numbers ending Dec 31 would still equate to a nice >£7. ..
But i'm sure the bidders all know the value of the B2B and B2C assets...
need to go back to posts around time of the bid being rejected. i think it was an article pasted on here from the times paper if memory serves me right.
Quick qn, where do you read that if Aristocrat were to offer a rebid, they only need 50% acceptance this time?
just read a note that a spac reverse into TEKKORP of caliente for $ 840m is rumoured of which playtech own 50%.