Author Topic: INLOT.AT - Intralot  (Read 135878 times)

Packer16

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INLOT.AT - Intralot
« on: December 26, 2013, 07:47:38 PM »
A lottery equipment manufacturer and operator.  One of the competitive advantages in Greece is gaming.  They have the largest % of GDP spent on gaming than any other country on the planet (like 2% of GDP).  So Intralot is their national champion and is selling at an EBITDA multiple of 3.6x.  Most other operators (SGMS, GTech, IGT, Bally and MGAM) are selling at 6 to 10x EBITDA.  At 9x EBITDA the company is a 4.5x bagger.  Most of their business is not in Greece (95%) but the US and Europe.  Their debt is selling at a premium to par and could probably be refied to generate more FCF.  The level of FCF assuming Euro25m of maintenance cap-ex is Euro71m.  All for an equity value of Euro284m. 

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hyten1

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Re: INLOT.AT - Intralot
« Reply #1 on: December 26, 2013, 08:40:50 PM »
packer question

what ebitda # are you using to get the 9x which translate to 4.5x bagger?

if i use the 23.795 (last quarter) or 42.673 (last9mo) i can't seem to get to your values? i am using 284 market cap.

hy

A lottery equipment manufacturer and operator.  One of the competitive advantages in Greece is gaming.  They have the largest % of GDP spent on gaming than any other country on the planet (like 2% of GDP).  So Intralot is their national champion and is selling at an EBITDA multiple of 3.6x.  Most other operators (SGMS, GTech, IGT, Bally and MGAM) are selling at 6 to 10x EBITDA.  At 9x EBITDA the company is a 4.5x bagger.  Most of their business is not in Greece (95%) but the US and Europe.  Their debt is selling at a premium to par and could probably be refied to generate more FCF.  The level of FCF assuming Euro25m of maintenance cap-ex is Euro71m.  All for an equity value of Euro284m. 

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Packer16

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Re: INLOT.AT - Intralot
« Reply #2 on: December 26, 2013, 08:53:08 PM »
The TTM EBITDA is Euro 172m (2012) less Euro 117m plus Euro 143m = Euro 198m based upon consolidated group data.

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hyten1

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Re: INLOT.AT - Intralot
« Reply #3 on: December 26, 2013, 09:18:03 PM »
packer sorry i am confused

177m (ttm) - 117m (first 9 mo of 2012) + 143m (first 9 mo of 2013) = 203m (EBITDA)

203m * 9 = 1827m

1827m is 6.5x of 284m?

am i missing something? just trying to understand, not trying to nitpick (i know there are approximations)

hy



The TTM EBITDA is Euro 172m (2012) less Euro 117m plus Euro 143m = Euro 198m based upon consolidated group data.

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tombgrt

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Re: INLOT.AT - Intralot
« Reply #4 on: December 26, 2013, 09:40:24 PM »
packer sorry i am confused

177m (ttm) - 117m (first 9 mo of 2012) + 143m (first 9 mo of 2013) = 203m (EBITDA)

203m * 9 = 1827m

1827m is 6.5x of 284m?

am i missing something? just trying to understand, not trying to nitpick (i know there are approximations)

hy



The TTM EBITDA is Euro 172m (2012) less Euro 117m plus Euro 143m = Euro 198m based upon consolidated group data.

Packer

Hi hyten. You still need to account for the debt after you get to the 1827 number.

hyten1

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Re: INLOT.AT - Intralot
« Reply #5 on: December 26, 2013, 09:59:09 PM »
tombgrt, is that implied in packers statement somehow?

because when i usually say so and so is trading at a multiple of ebitda, i literally mean ebidta * multiple = market cap

i guess that is now how you guys do it?

for example

SGMS, EBITDA=176m, market cap 1.44bil, which is 8.1x
IGT, EBITDA=805m, market cap 4.4bil, which is 5.4x

hy

packer sorry i am confused

177m (ttm) - 117m (first 9 mo of 2012) + 143m (first 9 mo of 2013) = 203m (EBITDA)

203m * 9 = 1827m

1827m is 6.5x of 284m?

am i missing something? just trying to understand, not trying to nitpick (i know there are approximations)

hy



The TTM EBITDA is Euro 172m (2012) less Euro 117m plus Euro 143m = Euro 198m based upon consolidated group data.

Packer

Hi hyten. You still need to account for the debt after you get to the 1827 number.

rayfinkle

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Re: INLOT.AT - Intralot
« Reply #6 on: December 26, 2013, 10:14:27 PM »
tombgrt, is that implied in packers statement somehow?

because when i usually say so and so is trading at a multiple of ebitda, i literally mean ebidta * multiple = market cap

i guess that is now how you guys do it?

for example

SGMS, EBITDA=176m, market cap 1.44bil, which is 8.1x
IGT, EBITDA=805m, market cap 4.4bil, which is 5.4x

hy

packer sorry i am confused

177m (ttm) - 117m (first 9 mo of 2012) + 143m (first 9 mo of 2013) = 203m (EBITDA)

203m * 9 = 1827m

1827m is 6.5x of 284m?

am i missing something? just trying to understand, not trying to nitpick (i know there are approximations)

hy



The TTM EBITDA is Euro 172m (2012) less Euro 117m plus Euro 143m = Euro 198m based upon consolidated group data.

Packer

Hi hyten. You still need to account for the debt after you get to the 1827 number.

Ebitda multiples represent value to the firm not just the equity. Therefore you compare ebitda (used as a cap structure neutral cf proxy) to enterprise value (equity value plus net debt). Long way of saying yes, it is implied.

If you net out other cf items to get to funds to equity, then you can compare to market cap. NYu professor aswath damodaran has great papers on how this logic flows through to FCC.

gary17

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Re: INLOT.AT - Intralot
« Reply #7 on: December 26, 2013, 10:16:39 PM »
is this available through interactive brokers?

i typed in INLOT and says its available but dosen't give me the full company name.  says available on FWB2 exchange.  I'm too cheap to pay for the premium IB services .....     thanks.......

frommi

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Re: INLOT.AT - Intralot
« Reply #8 on: December 26, 2013, 10:50:38 PM »
Are they impacted by a possible next bond haircut?

Phaceliacapital

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Re: INLOT.AT - Intralot
« Reply #9 on: December 27, 2013, 12:10:22 AM »
Hi Packer,

I've been invested in GTECH (previously known as Lottomatica) for quite some time and I rode OPAP along throughout 2013. For all those interested in the lottery space, here is what the typical value chain looks like:



My preference for GTECH stems from the fact that they are this fully vertically integrated full service lottery group (I know, a lot of words) which I think will be increasingly important as a lot of goverments/states are counting on gambling tax revenues to decrease their deficits. For instance, the potential in the US, where states are opening their state lotteries to players like GTECH ( who have the expertise to increase the revenues significantly) is quite significant and it is my belief that these states/governments have a preference for those players that can provide the entire "package" (and which have a good track record in doing so).

Other interesting GTECH facts:

-  Contract portfolio where 70% of revenues is under contract for the next 7 years
-  Barriers to entry as we see that renewal rates are around 80-90%
-  EBITDA margins at 33%

Coming back to Intralot, I took a quick look back in the day but was more convinced by the GTECH business model, but kind of lost track since then.

I did however think that they had a much larger exposure (aren't they the main supplier for OPAP?) to Greece?

I'll have to take a closer look, feel free for any questions in the lottery space.
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