OPAP trades at a discount – Buy {Manos Chatzidakis}

OPAP’s agents announced  earlier during the day that they will go on strike on Tuesday December 1st to protest against  the new sales tax (0.05 per wager. The strike will last 24h (one trading day) and its taking place on an uneventful sports day thus we don’t see any major impact to  OPAP’s profitability.

Market overshoots at current levels having already incorporated the sales tax impact. We remind that sales  tax is estimated to have a c50m loss in 2016 net earnings.  Assuming no VLT’s rollout in 2016 we see net earnings to land at €155m. OPAP trades on an  adjusted PE of 12.3x  and adjusted Ev/Ebitda of 6.5x, is €100m cash positive in 9M 2016 and has no significant Capex for new licenses in the next 5 years.

We see significant upside taking into account that negative catalysts have fully priced. Peers valuation also indicate a significant discount against OPAP’s current market cap (1.9bn).


The following table presents peers current valuation (Bloomberg estimates). We also remind that the acquisition cost of Emma Delta – winning bidder of the 2013 privatization- is €6.11/share or 652m for the 33.3% stake.

Company Market Cap (Eur. Mn) PE EV/EBITDA
Betsson 2,170 18.0 15.3
Unibet 2,520 22.4 17.2
Landbrokes 1,580 17.3 8.6
888 836 17.6 9.3
William Hill 4,360 13.7 9.0
Betfair 466 38.0 24.2
Paddy Power 5,160 31.1 20.2
W. Average 22.0 14.8