LanceSanity Posted December 31, 2013 Share Posted December 31, 2013 How? What's the symbol? I found it on IB, it trades on the Frankfurt exchange. It's extremely illiquid though. Link to comment Share on other sites More sharing options...
one-foot-hurdles Posted December 31, 2013 Share Posted December 31, 2013 I have had to purchase this one on the Greek exchange. Do you use Fidelity? That's the only broker I can find in North America that supports trading on the Athens Stock Exchange. From what I can tell, even Interactive Brokers does not offer access to the Greek exchange. I've purchased this over IB How? What's the symbol? Symbol: 9IL Underlying: Intralot Exchange: ATH/FWB2 Further details here: http://www1.interactivebrokers.ch/contract_info/v3.8/index.php?action=Conid%20Info&wlId=IB&conid=41895184&lang=en Its extra if you want live pricing(last price, bid/offer), but I have not subscribed for it. The position marks to market just like any other US stock position. Link to comment Share on other sites More sharing options...
racemize Posted December 31, 2013 Share Posted December 31, 2013 How? What's the symbol? I found it on IB, it trades on the Frankfurt exchange. It's extremely illiquid though. I see it under FWB2 and SWB2. Anyone know which would be better in terms of execution/liquidity? Link to comment Share on other sites More sharing options...
racemize Posted December 31, 2013 Share Posted December 31, 2013 I am referring to the equity/liability MI's not the asset MI's. You should treat the MI's as a subtraction before equity to shareholders. If you add the latest MI number of Euro75 million as debt you get an EV of Euro779 or an EV/EBITDA value of 4.0x. At 9.0x EBITDA, the implied upside is 338%. I think treating it as debt is easiest way to do it without the details of the MI accounting. Packer Hi Packer, looking at 3Q numbers and current market cap, I get the following EV: Market Cap: 292.5 m Cash: 149 Debt: 486+75 (depending on whether you include lease and other long term obligations) Minority Interest: 75 EV: 780 Edited for stupidity Link to comment Share on other sites More sharing options...
Packer16 Posted December 31, 2013 Author Share Posted December 31, 2013 I netted the Euro150 million of cash against the debt. Packer Link to comment Share on other sites More sharing options...
racemize Posted December 31, 2013 Share Posted December 31, 2013 The level of FCF assuming Euro25m of maintenance cap-ex is Euro71m. All for an equity value of Euro284m. Packer I keep getting higher FCF numbers using my normal approach. Is this what you did? EBTIDA: 195 Taxes: 24*2 = 48 Interest: 21*2 = 41 maintenance cap-ex = 25 FCF: 81 The other approaches came back much higher, for some reason. Thanks! Link to comment Share on other sites More sharing options...
racemize Posted January 1, 2014 Share Posted January 1, 2014 I am referring to the equity/liability MI's not the asset MI's. You should treat the MI's as a subtraction before equity to shareholders. If you add the latest MI number of Euro75 million as debt you get an EV of Euro779 or an EV/EBITDA value of 4.0x. At 9.0x EBITDA, the implied upside is 338%. I think treating it as debt is easiest way to do it without the details of the MI accounting. Packer Hi Packer, looking at 3Q numbers and current market cap, I get the following EV: Market Cap: 292.5 m Cash: 149 Debt: 486+75 (depending on whether you include lease and other long term obligations) Minority Interest: 75 EV: 780 Follow up question on this, on the asset side, there are also investments in subsidiaries and associates--would it be improper to add these to the EV calculation? Link to comment Share on other sites More sharing options...
LC Posted January 1, 2014 Share Posted January 1, 2014 It's my understanding that the value of subs is embedded in the market price of the equity, so adding them would be double counting. Link to comment Share on other sites More sharing options...
Packer16 Posted January 1, 2014 Author Share Posted January 1, 2014 For associates and subsidiaries that are consolidated you should not be add back value. However, investments that are not associates and/or subs should be added back. It looks like the investments are included in the other financial assets on Intralot's balance sheet (see footnote in 2012 AR). Packer Link to comment Share on other sites More sharing options...
plato1976 Posted January 1, 2014 Share Posted January 1, 2014 Hi, Packer: I am not sure if using comparable to estimate the upside is proper here. The FCF yield is roughly 25% here. At 4.5x we would be paying a FCF multiple of 18 I am not sure if this is a reasonable multiple for a company with this kind of business quality and growth 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. Packer Link to comment Share on other sites More sharing options...
original mungerville Posted January 1, 2014 Share Posted January 1, 2014 This was also my question. How is this a 4.5x bagger? If they are at 3.6X and you are talking a target of 9x, that is a gain of 2.5x no? Still a great potential gain but not 4.5x or are we misreading something? Link to comment Share on other sites More sharing options...
racemize Posted January 1, 2014 Share Posted January 1, 2014 This was also my question. How is this a 4.5x bagger? If they are at 3.6X and you are talking a target of 9x, that is a gain of 2.5x no? Still a great potential gain but not 4.5x or are we misreading something? Well, Packer was listing the potential upside on a EV/EBITDA basis, so it would look like this: current EBITDA of ~200 * 9 = 1800 - debt of (486+75) - minority interest of 75 + 150 cash = 1314 equity value. Current market cap is 292.5. 1314/292.5 = 4.5x However, it seems unlikely it will get that multiplier. 5-7 range makes more sense, which results in equity value of 514-914 equity value, implying upside of 1.75x and 3x, respectively. Similarly, if we gave it a P/FCF of 10x would give equity value of 810, which is a 2.76x. Other than the minority accounting issue, seems very cheap. Link to comment Share on other sites More sharing options...
Packer16 Posted January 1, 2014 Author Share Posted January 1, 2014 The 4.5x (it is closer to 4.3x) is based upon a 9x EBITDA multiple with about 500 million of net debt including MIs. So EBITDA of Euro196 x 9.0 = 1.764 b less .5b = Euro1.264b or about Euro 8 per share. The FCF multiple will be higher but the firm is still growing (12% annually). That is why I am using an EBITDA multiple. I would use FCF once the firm has more normalized growth (in a few years). I agree it will not get a 9x multiple on normalized EBITDA but Intralot is expected to have Euro226 million EBITDA by 2015 a 15% growth from the current level of EBITDA. In either case, at this price, Intralot has a nice margin of safety. Packer Link to comment Share on other sites More sharing options...
racemize Posted January 1, 2014 Share Posted January 1, 2014 Interesting article: http://www.reuters.com/article/2013/06/17/fitch-rates-intralot-sa-b-outlook-stable-idUSFit66055920130617 Of particular note: Low to Negative FCF Over 2007-2012, Intralot's FCF has consistently been negative, mostly due to expansionary capex (also including investments in equipment initially booked as inventory) of EUR100m to EUR150m per annum. Another factor of cash flow absorption is linked to the significant proportion of EBITDA that does not belong to Intralot (although fully consolidated), linked to joint ventures. This results in approximately EUR20m of annual minority dividend distributions. A move of FCF into positive territory in 2014 is premised on a reduction of capex and on expected returns from the projects in which the company is currently investing. Should we be docking EBTIDA/FCF by 20m then? Edit: well probably not for EV calculations since we added it as debt, but for FCF perhaps? Link to comment Share on other sites More sharing options...
yadayada Posted January 1, 2014 Share Posted January 1, 2014 Yadayada, "If lets say they own 60% of some company, shouldnt they put 60% of the receivables number on the cash flow statement owed instead of 100%? Because it all has to balance out on the balance sheet?" No, the way it usually works (under US GAAP) is if it is consolidated because they own 60% of it, then you put 100% of the receivables on the balance sheet and in the cash flow statement. Under IFRS, however, you can get pro-rata consolidation in certain cases. So it comes down to how it is consolidated. If a subsidiary was pro-rata consolidated, however, you would not get a minority interest on the balance sheet for the subsidiary. So I think if you guys are dealing with a minority interest from that subsidiary, then it is fully consolidated which means 100% of the receivables should be on-balance sheet and on the cash flow statement (even if they only own 60%). This is also why adding minority interest to the debt (as Packer has suggested) is the easiest thing to do (and it makes sense) when calculating EV/EBITDA (ie he is taking in all the cash flows and income on a fully consolidated basis, so he needs to account for the MI not owned by adding that to the EV, similar to the treatment for debt). Now, its not the only way to do it, but surely its the easiest and it does make sense. In certain cases, tweaking this approach may be warranted, however. I hope this helps. thanks for the explanation. So with GAAP principles, receivables would basicly build up? And what would be a way to figure out what % of receivables will get paid to intralot now? Link to comment Share on other sites More sharing options...
racemize Posted January 1, 2014 Share Posted January 1, 2014 Updated FCF calculation after reading a few analyst reports I found: EBITDA: 195 Taxes: ~25 Interest: ~40 (based on 3Q numbers) Cap-ex: ~50 maintenance cap-ex: ~25 minority payments: ~20-25 (based on Fitch indication of 20m and prior reports where it was around 20-23% of EBIT) GFCF: 55 P/GFCF: 5.3 FCF: 80 P/FCF: 3.65 Please criticize. Link to comment Share on other sites More sharing options...
Packer16 Posted January 1, 2014 Author Share Posted January 1, 2014 Good first estimate. I have 2 comments: 1. I think the MI should be treated as debt as the historical distributions are all over the place. Does Fitch provided a basis for the MI dividends? 2. For interest expense I think you need to net interest income. From the debt report they estimate interest income of about Euro 23 million. In addition, if liquidity improves, I think Intralot should be able to refi the sub debt at mid 7s interest rate and add about Euro7m to FCF. Packer Link to comment Share on other sites More sharing options...
jeremykgold Posted January 1, 2014 Share Posted January 1, 2014 Fitch says it is approximately 20M, I'm guessing they're just taking the average of the 2009-2012 annual minority interest payments which comes out to ~ 20M. Link to comment Share on other sites More sharing options...
racemize Posted January 1, 2014 Share Posted January 1, 2014 Good first estimate. I have 2 comments: 1. I think the MI should be treated as debt as the historical distributions are all over the place. Does Fitch provided a basis for the MI dividends? Yeah, I like the debt approach, but was seeing if I could come at it another way. Fitch just listed 20m, so I'm not sure where they got it; however, I did find an analyst report that shows the "minority stake in profits" in 2010, with estimates of it going forward. It looked like it was ~23% of EBIT, so I used that as a guide. Unfortunately, they did not spell out how it worked. Here's a link to the report (found using google), see page 10: https://www.dropbox.com/s/zu0q613dad79xzo/2011-05-20%20Euroxx_Intralot_Resume-of-Coverage_20May11.pdf 2. For interest expense I think you need to net interest income. From the debt report they estimate interest income of about Euro 23 million. In addition, if liquidity improves, I think Intralot should be able to refi the sub debt at mid 7s interest rate and add about Euro7m to FCF. Packer I was struggling with how to account for this accurately, and just took the interest expense line item from the cash flow in Q3. I think on a netted level, using the income statement, I could use (14-8)*4 = 24 million, which jives with what the debt report says. Does make it come out a bit prettier. Link to comment Share on other sites More sharing options...
yadayada Posted January 1, 2014 Share Posted January 1, 2014 More specifically, in Malta and following an international tender, the Company won again a 10-year license, this time, for the operation of the national lottery, maintaining in this way its presence in one of its most important markets. Why is malta the most important market? I get that alot of gambling is head quartered there, but the island is tiny with only 400k inhabitants. And this: INTRALOT, is also participating in the ongoing process for the sale of a 33% stake in OPAP. wtf lol? That is worth close to a billion euros. OPAP's market cap is over 3 billion euros. Am I misunderstanding something here again? If true this would mean massive upside ? Moreover, the tender for the sale of a 29% stake of OPAP is expected to be announced soon and the Greek Ministry of Finance is awaiting an important interest from strong groups. From the 2011 annual report. I kinda cannot believe it, seems kinda too good to be true :/ . Link to comment Share on other sites More sharing options...
bmichaud Posted January 1, 2014 Share Posted January 1, 2014 Intralot was rumored to be bidding for a 33% stake, not selling it. http://mobile.reuters.com/article/idUSL5N0D60PP20130419?irpc=932 Link to comment Share on other sites More sharing options...
Guest hellsten Posted January 2, 2014 Share Posted January 2, 2014 I see it under FWB2 and SWB2. Anyone know which would be better in terms of execution/liquidity? In IB, I believe FWB2 is the Frankfurt and SWB2 is the Stuttgart exchange: http://www.boerse-frankfurt.de/en/equities/intralot+integr+it+sys+lottery+ag+GRS343313003 https://www.boerse-stuttgart.de/rd/en/aktien/factsheet?ID_NOTATION=64981194 https://www.boerse-stuttgart.de/rd/en/aktien/factsheet?ID_NOTATION=65145946 Turnover in €: 5,841.15 No Greece listed here: https://www.interactivebrokers.com/en/index.php?f=exchanges&p=europe Link to comment Share on other sites More sharing options...
plato1976 Posted January 2, 2014 Share Posted January 2, 2014 Anyone tried to buy inlot in IB ? Today I had a try with 100 shares and seems the IB 's calculation is messed up here: INLOT, Stock, FWB2, EUR 100 1.95 502,502.00 At 1.95 per share, the 100 shares I got has a value of 502502.00 My account now also show I now have 502502 EURO I wish I had so much euro in my account but it's impossible - it's a small account and the remaining margin power is way less No idea what's the unit for this value... I see it under FWB2 and SWB2. Anyone know which would be better in terms of execution/liquidity? In IB, I believe FWB2 is the Frankfurt and SWB2 is the Stuttgart exchange: http://www.boerse-frankfurt.de/en/equities/intralot+integr+it+sys+lottery+ag+GRS343313003 https://www.boerse-stuttgart.de/rd/en/aktien/factsheet?ID_NOTATION=64981194 https://www.boerse-stuttgart.de/rd/en/aktien/factsheet?ID_NOTATION=65145946 Turnover in €: 5,841.15 No Greece listed here: https://www.interactivebrokers.com/en/index.php?f=exchanges&p=europe Link to comment Share on other sites More sharing options...
jeremykgold Posted January 2, 2014 Share Posted January 2, 2014 What do they plan to do with the increased discretionary cash flow? Link to comment Share on other sites More sharing options...
prevalou Posted January 2, 2014 Share Posted January 2, 2014 In a Gtech presentation i read that maintenance cap ex are 7,5% of sales. How come maintenance cap ex for Intralot be only 25m € ? Link to comment Share on other sites More sharing options...
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