GVC Holdings Plc

GVC Holdings Plc (GVC) is an Isle of Man-incorporated sports-betting and gaming groups. The company owns some of the leading brands in the gaming industry and is one of the largest sports betting and gaming groups in the world. 

Financial Highlights – Financial Year 2019 (31^st December 2019, GBP, million)

(Source: Annual Report, Company Website)
 
For the financial year ending 31^st December 2019, the group’s revenue increased to GBP 3,600.5 million as against GBP 2,935.2 million in FY2018. The Underlying EBITDA stood at GBP 761.1 million in FY2019 versus GBP 640.8 million in FY2018. The underlying PBT (Profit before tax) stood at GBP 535.8 million in FY2019 versus GBP 434.6 million in FY2018. The group reported a loss after tax of GBP 140.7 million in FY2019 versus a loss after tax of GBP 56.4 million in FY2018. The total dividend stood at 35.2 pence in FY2019 versus 32 pence in FY2018.

Share Price Performance

Daily Chart as of March 13^th, 2020, before the market close (Source: Thomson Reuters)

GVC Holdings Plc shares were trading at GBX 519.40 at the time of writing before the market close (at 8:11 AM GMT) on 13^th March 2020 and remained same versus the previous day closing price. Stock's 52 weeks High is GBX 956.80 and Low is GBX 437.40.

Valuation Methodology


Conclusion
The company has shown a decline in financial performance for the financial year 2019. The revenue has increased, while the bottom-line performance has declined for the period. The online gaming market in which the group operates is continuously evolving that too at a rapid pace and is full of growth opportunities. In the medium term, the company is targeting double-digit revenue growth from its online business through M&A activity and underlying market growth.The group is looking forward to international expansion through organic and non-organic growth.

Over the course of 4 years (FY15 - FY19), the company’s revenue surged from GBP 180 million in FY15 to GBP 3,600.50 million in FY19. Compounded annual growth rate (CAGR) stood at 11.48 per cent.

Based on the decent prospects and support from the valuation as done using the above method, we have given a “BUY” recommendation at the current price of GBX 440.00 (as on 13^th March 2020, before the market close at 9:05 AM GMT), with lower double-digit upside potential based on 6.90x NTM Price/Earnings (approx.) on FY20E earnings per share (approx.).

Pagegroup Plc

Pagegroup Plc (LON: PAGE) is an Addlestone, the United Kingdom-based group, which provides the recruitment consultancy and other ancillary services.

Financial Highlights – Financial Year 2019 (31^st December 2019, GBP, million)

(Source: Annual Report, Company Website)
 
For the financial year ending 31^st December 2019, the group’s revenue increased by 6.7 per cent (up 7% at constant currency basis) to GBP 1,653.9 million as against GBP 1,549.9 million in FY2018. The operating profit stood at GBP 146.7 million in FY2019 versus GBP 142.5 million in FY2018, reflecting an increase of 3 per cent (up 2.2% at constant currency basis) for the period. The company’s PBT (Profit before tax) stood at GBP 144.2 million in FY2019 versus GBP 142.3 million in FY2018. The group reported basic earnings per share of 32.2 pence in FY2019 versus 32.5 pence in FY2018. The total dividend (including special dividend) stood at 26.43 pence per share in FY2019 versus a total dividend (including special dividend)of 25.83 pence per share in FY2018.

Share Price Performance

Daily Chart as of March 13^th, 2020, before the market close (Source: Thomson Reuters)

Pagegroup Plc shares were trading at GBX 340.60 at the time of writing before the market close (at 8:15 AM GMT) on 13^th March 2020 and up by 2.47% versus the previous day closing price. Stock's 52 weeks High is GBX 549.50 and Low is GBX 321.80.

Valuation Methodology
 
 

Conclusion
The company is continuously focusing on driving profitable progress with strategically investing towards its Vision of gross profit of £1 billion. The company has made further progress on the strategic transformation programmes, completing the network of regional shared service centres, three out of four of which are now on the new global financial system. The group is also making good progress on the transformation of the business technology function, which will standardise the systems globally and move them into the Cloud. Due to outbreak of COVID-19, many of the company’s clients have not able to resume work in Chinese region and also other parts of the world, which would impact the company’s performance significantly in the month of March.

Over the course of 4 years (FY15 - FY19), the company’s revenue surged from GBP 1,064.9 million in FY15 to USD 1,653.9 million in FY19. Compounded annual growth rate (CAGR) stood at 11.63 per cent.

Based on the above factors and supported by valuation done using the above method, we have given a “Buy” recommendation at the current price of GBX 322.60 (as on 13^th March 2020, before the market close at 9:05 AM GMT) with lower double-digit upside potential, based on 11.56x NTM Price/Earnings multiple (approx.) on FY20E earnings per share (approx.).
 
 
*All forecasted data and peer information have taken from Thomson Reuters.

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