tombgrt Posted April 1, 2015 Share Posted April 1, 2015 Had a quick glance so far. Not entirly sure I like how they are shifting the business but maybe they have little choice. Capex down good vs 2013, hope it has a way to fall from here. We must note that in the end of December, 2014, we drew down €200m from our Syndicated Facility for financial prudency reasons, which positively affected our cash position. This didn’t have any effect on net debt. Can anyone tell me why the would do that? Other thoughts? TIA. If anyone has a transcript of the call, that would be great as well. :) My first thought was grexit. Liquidity might freeze up if lenders think Greece goes Drachma? Yes, my thought as well. ;( Too bad we don't see news on refi of debt or relisting thus far. Link to comment Share on other sites More sharing options...
Phaceliacapital Posted April 1, 2015 Share Posted April 1, 2015 - It's for safety reasons + the cash is located in Lux/London so no Greece troubles. - Not looking at repurchase of shares - Maybe retiring 2018 debt. They should do this immediately, it's way too expensive. - No relisting mentioned. Sharing is caring: Intralot_FY2014.pdf Link to comment Share on other sites More sharing options...
tombgrt Posted April 1, 2015 Share Posted April 1, 2015 Thank you as always Phaceliacapital! ;) Guess the repurchase of shares late last year was an initiative to bump up the stock price, not enhance value per share... Link to comment Share on other sites More sharing options...
tombgrt Posted May 19, 2015 Share Posted May 19, 2015 http://www.intralot.com/content/3341/announcement http://www.intralot.com/content/3344/shareholders-annual-general-meeting-proposal-creation-national-lottery-greece Link to comment Share on other sites More sharing options...
tombgrt Posted May 28, 2015 Share Posted May 28, 2015 Q1 results http://www.intralot.com/content/3360/intralot-announces-its-1st-quarter-2015-results-continuous-growth-12-revenue-increase http://www.intralot.com/sites/default/files/INTRALOT%20Press%20Release%201Q15.pdf Link to comment Share on other sites More sharing options...
frommi Posted May 28, 2015 Share Posted May 28, 2015 Q1 results http://www.intralot.com/content/3360/intralot-announces-its-1st-quarter-2015-results-continuous-growth-12-revenue-increase http://www.intralot.com/sites/default/files/INTRALOT%20Press%20Release%201Q15.pdf In the conference call they mentioned that EBITDA will grow this quarter, and that was already at the end of Q1. Looks like you can`t trust greeks. Whats all this growth in revenue worth if it doesn`t fall to the bottom line? Link to comment Share on other sites More sharing options...
tombgrt Posted May 28, 2015 Share Posted May 28, 2015 Yes they were aiming for 175-185m EBITDA after last quarter, EBITDA for Q1 is down 17.2% currency adjusted, 42.8M. I'm certainly less optimistic than last year. Don't see the double digit growth management is expecting. The higher margin and stable B2B business from the past certainly seemed more attractive than the low margin B2C business they had to focus on now due to increased competition. Link to comment Share on other sites More sharing options...
jamesmadison Posted May 28, 2015 Share Posted May 28, 2015 Apologies for the newbie question, but when I search for Intralot on both my Fidelity and Vanguard accounts, I get the option of the following tickers: Symbol IRLTF CUSIP X3968Y103 or Symbol IRLTY CUSIP 46117T109 Looks like they both trade on the pink sheets with virtually no volume. Are one of these the appropriate tickers for the stock or do I need to do something else if I want to own Intralot? Link to comment Share on other sites More sharing options...
Packer16 Posted May 28, 2015 Author Share Posted May 28, 2015 If you have Fidelity you need to call international trading by phone to place an order. Packer Link to comment Share on other sites More sharing options...
PullTheTrigger Posted May 28, 2015 Share Posted May 28, 2015 In Fidelity, as long as you are approved to buy international stocks, you can place the trade online. The symbol on the Greek Exchange is INLOT:GR. Link to comment Share on other sites More sharing options...
jamesmadison Posted June 1, 2015 Share Posted June 1, 2015 Fidelity charges EURO19 per trade plus 1% to convert from Dollar to Euro to make the trade. How does this compare to other services? Link to comment Share on other sites More sharing options...
tombgrt Posted June 2, 2015 Share Posted June 2, 2015 I think IB only charged me 5-10€ per trade (a minimum) or 0.05-0.1% of the amount for the German listing. Liquidity on that listing is very low so you will likely pay some spread because a MM will generally only execute your trade if favorable to him. Link to comment Share on other sites More sharing options...
wachtwoord Posted June 2, 2015 Share Posted June 2, 2015 I think IB only charged me 5-10€ per trade (a minimum) or 0.05-0.1% of the amount for the German listing. Liquidity on that listing is very low so you will likely pay some spread because a MM will generally only execute your trade if favorable to him. You were able to purchase on the Athens exchange with IB? Link to comment Share on other sites More sharing options...
tombgrt Posted June 3, 2015 Share Posted June 3, 2015 I think IB only charged me 5-10€ per trade (a minimum) or 0.05-0.1% of the amount for the German listing. Liquidity on that listing is very low so you will likely pay some spread because a MM will generally only execute your trade if favorable to him. You were able to purchase on the Athens exchange with IB? No sorry for not being clear, I bought the German listing. this one: http://www.bloomberg.com/quote/9IL:GR I was trying to say that you always have a minimum trade cost (5-10€ generally) but that it can be higher because it is based on a percentage of the trade. If it is under the minimum, you obviously just pay the minimum. Link to comment Share on other sites More sharing options...
jamesmadison Posted June 3, 2015 Share Posted June 3, 2015 How does the 1% Fx conversion seem? Link to comment Share on other sites More sharing options...
ContrarianNick Posted June 18, 2015 Share Posted June 18, 2015 Just wanted to shed some light on the 200 mln syndicated loan the company has recently drawn: 1. The cost of this line is around 5%/5.5% significantly lower than the bond maturing in 2018 (which, by the way, is callable in August 2016). 2. The cash is deposited in banks outside of Greece so thee is no risk significant risk related to a potential greexit. 3. Optimizing the financial structure of the company would simply require buying the 2018 bond on the market using the syndicated loan and generating an extra yield of around 4% (Bond YTM - Cost of syndicated loan). Hope this helps cheers Link to comment Share on other sites More sharing options...
ContrarianNick Posted June 18, 2015 Share Posted June 18, 2015 While I am at it I might as well sum up the main points behind a bullish thesis on the stock in order to make sure I didn’t get anything too wrong: 1.Intralot generates around 5% of EBITDA in Greece while the rest is generated in Turkey, Azerbaijan, US, Bulgaria, Jamaica, Argentina, Malta, Perù and Italy. The company is therefore perceived as greek by being part of the major stock index but, from a profit generating perspective it certainly is not. 2.The company’s gross debt includes two bonds and one syndicated loan for a total amount of Eur 775 mln and a net debt position at Q1 15 of Eur 393 mln (2,1x Net Debt/EBITDA). However the company is paying 9,75% on the first bond (Eur 325 mln), a level which does not reflect the effective earning power and geographic segmentation of the group. This bond is callable in August and, if retired, it should provide a sensible uplift to the cash generation for shareholders. 3.Current valuation reflects the sovereign risks related to a Grexit event. The company trades at around 3,9x EV/EBITDA and at approximately 23% FCF Yield (pre-minorities dividends) with a higher than warranted cost of debt. In case of Grexit the company should seek listing elsewhere in Europe triggering a rerating of the multiples (which should likely be more around 6x EV/EBITDA on a conservative basis). If a deal between Greece and Europe is instead agreed then a decline in interest rates in Greece should normalize and provide a similar rerating of the multiple. Please let me know where I am wrong as it sounds a little bit too good to me... cheers Link to comment Share on other sites More sharing options...
racemize Posted June 18, 2015 Share Posted June 18, 2015 Disclosure: I own shares but didn't have enough conviction to average down (which means I probably shouldn't have owned it in the first place). My issue is that the minority dividends seem to be absorbing all of the profitable bits of this company. Using the valuation of the minorities on the balance sheet for EBITDA ratios, it looks cheap. But if the profitability is skewed to the minority holders, then the overall EBITDA numbers aren't that useful and the FCF yields are not nearly as high for common shareholders. I'm hoping I'm wrong on this front, but it is hard to see where the money goes, other than to the minorities... Link to comment Share on other sites More sharing options...
ContrarianNick Posted June 18, 2015 Share Posted June 18, 2015 You are right, minorities make the valuation of the company more difficult and it certainly does not create more clarity for the market. Except for 2014, the past years have clearly shown how the profitability of the operations was mostly enjoyed by the minorities as FCF generation was lacklustre. However CAPEX should now converge towards more stable levels as the company has fewer contract renewals upcoming (Italy in 2017 and Turkey in 2018) and the cash generation should be more like 2014. In terms of valuation my calculations are as follow: Min Max EBITDA 192,9 192,9 EV/EBITDA Multiples 6,0 8,0 -------- -------- EV 1.157,6 1.543,5 - Net Debt 393,0 393,0 - Minorities 358,8 478,4 -------- -------- Equity Value 405,8 672,1 Per Share 2,6 4,2 Current price 1,53 1,53 Upside/Downside 67% 176% To value minorities I applied the same EV/EBITDA multiple to the minorities share of the EBITDA (Calculated based on 2014 annual report) in order to get a better sense their value. cheers Link to comment Share on other sites More sharing options...
Packer16 Posted June 18, 2015 Author Share Posted June 18, 2015 I also get some comfort that a large distressed investor feels that Intralot is worth Euro3.0 per share. If the minorities took a large part of the value, then I do not know how you get to Euro3.0 per share. Packer Link to comment Share on other sites More sharing options...
frommi Posted June 18, 2015 Share Posted June 18, 2015 Your EBITDA numbers look pretty optimistic given the Q1 results, which are the first without the very profitable contracts from greece and romania. - Constant currency basis: net of a positive FX impact of €3.4m, EBITDA reached €42.8m in 1Q15, a decrease of 17.2% y-o-y. Margin of safety seems pretty slim. Link to comment Share on other sites More sharing options...
ContrarianNick Posted June 18, 2015 Share Posted June 18, 2015 Looking at Q1 the EBITDA number is probably too high although this number is in line with management guidance (same level as 2013). Using 2014 numbers the range should be between 1.9-3.3 euros, still interesting, but far from being an incredible buy opportunity. Guess we should wait for Q2 and see how they perform... One could however also argue that I am placing a value on minorities which is between 3.5/4.8 their book value (quite aggressive) so, probably, the mos is not as slim as it looks like at first. Link to comment Share on other sites More sharing options...
Packer16 Posted June 21, 2015 Author Share Posted June 21, 2015 You are right, minorities make the valuation of the company more difficult and it certainly does not create more clarity for the market. Except for 2014, the past years have clearly shown how the profitability of the operations was mostly enjoyed by the minorities as FCF generation was lacklustre. However CAPEX should now converge towards more stable levels as the company has fewer contract renewals upcoming (Italy in 2017 and Turkey in 2018) and the cash generation should be more like 2014. In terms of valuation my calculations are as follow: Min Max EBITDA 192,9 192,9 EV/EBITDA Multiples 6,0 8,0 -------- -------- EV 1.157,6 1.543,5 - Net Debt 393,0 393,0 - Minorities 358,8 478,4 -------- -------- Equity Value 405,8 672,1 Per Share 2,6 4,2 Current price 1,53 1,53 Upside/Downside 67% 176% To value minorities I applied the same EV/EBITDA multiple to the minorities share of the EBITDA (Calculated based on 2014 annual report) in order to get a better sense their value. cheers I have different numbers than you for net debt and MI. Here is my build-up in Euro: EBITDA (based upon guidance at 2013 levels) 195 195 (1Q annualized in 185) Multiple 6 8 Ops Value 1170 1560 Less Net Debt (776-479) incl JVs 297 297 Less MI 105 105 Equity Value 768 1158 Per Share 4.84 6.80 I get 46.2m EBITDA from Q12015 financial statement and conference call. If you do calculations with 20m for MI distributions and remove MIs you get similar numbers. The reduction to 1Q annualized EBITDA reduces the range to 4.47 to 7.03. Still some nice upside from 1.55 now. Packer Link to comment Share on other sites More sharing options...
Phaceliacapital Posted June 22, 2015 Share Posted June 22, 2015 Why is there such a difference in your MI calculations? Thanks. Link to comment Share on other sites More sharing options...
ContrarianNick Posted June 22, 2015 Share Posted June 22, 2015 Hey Packer, can you elaborate a little bit more about the Net Debt and the MI calculations? Inlot had, at the end of Q1, Eur 393 mln in Net Debt (http://www.intralot.com/sites/default/files/INTRALOT%20Press%20Release%201Q15_FINAL.pdf) and the minorities are unlikely to be worth only 1x book value (which is roughly what you are using). Considering that around 25/30% of the group EBITDA is “owned” by minorities I think it would be more realistic to value them using an EBITDA multiple range not dissimilar from the one used to value Inlot as a whole. Alternatively one could simply value the company using the true EBITDA (ex-minorities) and simply subtract the net debt. Link to comment Share on other sites More sharing options...
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