PTEC LN - Playtech

[tol1]

Stock has had 2 profit warnings LTM and is down ca. 50%. I passed the stock based on corporate governance concerns and material exposure to the unregulated market, in particular, in China. Turned out to be the right call as the stock fell 25% this week after profit warning #2. The founder sold down his stake materially which for me was another red flag.

 

Has anyone looked into Playtech more in-depth and has potentially a variant view on free cash flows going forward versus the sell-side?

 

 

[topofeaturellc]

Sagi selling down his stake is long term good but it is indicative of the current issues. He's a walking governance issue.  You've also got issue with a bunch of it's regulated business being in decline as the UK guys realize they need to insource what Playtech did for them.  Ultimately I'd guess PTEC was just capturing too big a vig relative to the value they actually brought.  That's said probably worth revisiting here.

[tol1]

Sagi selling down his stake is long term good but it is indicative of the current issues. He's a walking governance issue.  You've also got issue with a bunch of it's regulated business being in decline as the UK guys realize they need to insource what Playtech did for them.  Ultimately I'd guess PTEC was just capturing too big a vig relative to the value they actually brought.  That's said probably worth revisiting here.

 

Why the need to in-source for customers?

[topofeaturellc]

I think they have come to the realization there is more value in maintaining control over the entire value chain from an implementation/content roll out.  Also ptec made a bunch of money doing marketing services that will go to zero as the bookies realize that is the core of the digital business.

 

If you look at the Ladbrokes/Coral/GVC saga through the years basically every step playtech had something stripped from them. And this was after hills had exited their jv.

 

I’m not up on the numbers enough to opine on the current valuation vis a vis these issues.

[tol1]

The consolidation among bookies is certainly not helpful either. Need to do the reading first and see what/if any key financial drivers to come up with sensible estimates.