The announcement of OPAP's Q3/Nine months financial results came to confirm the reason for the long-standing preference of foreign and domestic investment portfolio managers. Revenue of €1.65 billion, net profit of €352 million, and a strong cash position, figures that BnB detailed in a recent issue. 

On the face of it, a very good nine-month figure, but what catches your eye is the plus 44.7% in Q3 net profit, i.e., €120.5m (up from €83.3m in 2023). The figure alone says a lot, as it comes mainly from the Joker's Mega Jackpot.

What this means. An analyst who has been following the organisation over time explained it to me: "Multiple/alternative sources of dramatic revenue growth/net profitability as management has proven to be both insightful and seize opportunities." At the same time, with a net debt to EBITDA (LTM EBITDA) ratio of 0.15X (and 0.18X including leases), the balance sheet is characterised by low cost of debt. Consequently, the strong Q3 is due on the one hand to the higher payout (compared to 2023) and on the other hand to the double-digit decrease in operating expenses, down 12.2% (a litigation provision was recorded in Q3/2023). 

Before the announcement of the figures, the analysts' consensus estimate estimated EBITDA (2024) at €772m; management is modelling it towards €770m, but Eurobank Equities is referring to a higher target of €785m. One might say that from €770-€772m to €785m the difference is not that big. In theory it is, but €770-€772 million is the upper limit/high end of the forecast range, a bar that is revised even higher by brokerage analysts who know "inside out" the details that can make the difference.

In this case, the difference to the upside. What do the Eurobank analysts tell us?

That shareholders/investors will receive a dividend (2024) that will be close to the average of the last 3 years, i.e., €1.6/share, or a 12% dividend yield. Not Bad will think the manager of a mezzanine fund, investing client capital in "low-risk, high dividend yield" stocks.

How this potential amount to be distributed is derived: Free cash flow of €190m (Q3), net debt reduced to €119.3m. Also, through the treasury share purchase program (i.e., completed on 5 November), 9,619,689 treasury shares were acquired at a total cost of €149.8m (€15.57/share). Now OPAP has Treasury shares equivalent to 3.09% of m.k. 

Let us now turn to Jan Karas' statements, in particular the part about performance being at the higher end of the range for 2024.

The group CEO revises the revenue/profitability forecast "for the better." I assume he has in mind the fact that the Greeks invested €10bn in goddess luck. According to the Gambling Supervision and Control Commission, wagers reached €28.36 billion (January-August 2024 period), up from €24.83 billion (the corresponding eight months of 2023), an increase of 14.2%. According to the NECP, the "net" money that came out of players' pockets (deducting the amounts replayed) increased to €10 billion (from €9 billion).

As well as the remarks of analysts at Wood & Co. According to the report, which gives a target price for the stock of €18.9, IPA produces results that consolidate the qualities of solid growth and low leverage, combined with a generous shareholder remuneration policy and an attractive valuation. The key takeaways from the report are that the future is bright and it's online. 

But also the attractive valuation, both in absolute and relative terms, with the stock trading at 9 times EV/EBITDA and 14.5 times P/E for 2024-2026. Wood&Co's sees a two-year period of strong profitability—hence increased distributions to shareholders and investors—essentially agreeing with their counterparts at Eurobank Equities.