xtreeq Posted January 5, 2014 Share Posted January 5, 2014 I'm trying to find the response filed by McCaffrey references here on p.3 which includes the background check they did on Intralot: http://law.justia.com/cases/federal/district-courts/illinois/ilndce/1:2011cv08046/262292/41 Anyone have an idea where I should look? Link to comment Share on other sites More sharing options...
Packer16 Posted January 5, 2014 Author Share Posted January 5, 2014 I don't know Greek law but management was acquitted. I do have one note from an analysts report that initiation of prosecution doesn't amount to guilt but just the initiation of the process of examining whether there is enough evidence to further pursue prosecution. In the US, prosecution does not start until there is enough evidence to pursue prosecution. Packer Link to comment Share on other sites More sharing options...
prevalou Posted January 5, 2014 Share Posted January 5, 2014 Thanks Packer for the clarification. If i take their presentation: Ebitda=34,3% gross win, so gross win=196/,343=587 and maintenance cap ex= 25/571=4,4% of revenue. It seems like about 1/2 of competitors maintenance cap ex. There is no margin of security in this calculation. For instance, concerning IGT Game (segment of IGT with no growth and comparable with Intralot, cap ex are more than 10 % of revenue and SGMS a lot more). I noticed that they didńt win a contract In the us since the Kroll publication in 2010. On the contrary they lost a contract. I wonder if this report didńt kill their business in the us. Link to comment Share on other sites More sharing options...
Packer16 Posted January 5, 2014 Author Share Posted January 5, 2014 I cannot follow how you got Euro571 net revenues for Intralot. See above for calculation of net based upon 2012 values. So the estimated maintenance cap-ex is 5% of net sales. SGMS cap-ex number (8%) includes growth and some of the GTech contracts (7.5%) in the US are more capital intensive than others as they are BPO contracts. So even if you increase cap-ex by 3% of net sales (which would include growth) it reduced FCF by 17m so you are at 70m or a multiple of 4.4x or and FCF yield of 23%. IGT is in a different business than Intralot. These guys provide machines which go into casinos and it is more capital intensive than the lottery business. As to the lawsuit, I think it has little or no impact as Intralot won renewals in Taiwan, Greece, Poland, Australia, US (Ohio and South Carolina) in 2013. Packer Link to comment Share on other sites More sharing options...
xtreeq Posted January 5, 2014 Share Posted January 5, 2014 Didn't know they won the contracts in Ohio and South Carolina. I was worried that the Kroll report will be the end to their business in the US. Link to comment Share on other sites More sharing options...
prevalou Posted January 5, 2014 Share Posted January 5, 2014 For my calculation i look at the presentation page 12: intralot ebitda= 34,3% of gross wins. So if ebitda= 196, then gross wins=196/,342=571. Link to comment Share on other sites More sharing options...
Packer16 Posted January 5, 2014 Author Share Posted January 5, 2014 The Euro196m number is TTM 2013, the 2012 number is closer to Euro178m. Packer Link to comment Share on other sites More sharing options...
prevalou Posted January 5, 2014 Share Posted January 5, 2014 It doesńt change anything, maintenance cap ex are In m'y calculations proportionnal to revenue. I suppose 25m$ cap ex is for 2013 and ebitda is still 34,3% of revenue Link to comment Share on other sites More sharing options...
Packer16 Posted January 5, 2014 Author Share Posted January 5, 2014 What it changes is the maintenance/rev number for Intralot to about 5% from 4.5%. Which is closer to the other benchmarks. Packer Link to comment Share on other sites More sharing options...
prevalou Posted January 5, 2014 Share Posted January 5, 2014 Anyway, even if i double the maintenance cap ex to 50m, free cash flow is 61 m according to your calculation and free cash flow yield is 20%, not that bad! Link to comment Share on other sites More sharing options...
investor-man Posted January 8, 2014 Share Posted January 8, 2014 dumb question: on Fidelity INLOT:GR is INLOT.AT? Link to comment Share on other sites More sharing options...
kmukul Posted January 8, 2014 Share Posted January 8, 2014 there is a ADR also IRLTY with very low volume, is that the same? Link to comment Share on other sites More sharing options...
investor-man Posted January 8, 2014 Share Posted January 8, 2014 there is a ADR also IRLTY with very low volume, is that the same? I have seen that, but last quote is as of March 8th, 2013 Link to comment Share on other sites More sharing options...
Gamecock-YT Posted January 8, 2014 Share Posted January 8, 2014 there is a ADR also IRLTY with very low volume, is that the same? I have seen that, but last quote is as of March 8th, 2013 It does actually have a quoted ask price on it at least, just at a fairly significant spread over the euro price. Link to comment Share on other sites More sharing options...
luck Posted January 8, 2014 Share Posted January 8, 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…" Hi plato- Wondering if you figured out or someone provided some insight into what happened with this IB order? Seems pretty wild. Trying to figure out if I should open an account at IB or Fidelity… Fidelity seems more expensive, but perhaps more user friendly for global stocks. Thanks in advance. Link to comment Share on other sites More sharing options...
plato1976 Posted January 8, 2014 Share Posted January 8, 2014 it's ok to buy intralot in IB no problem now "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…" Hi plato- Wondering if you figured out or someone provided some insight into what happened with this IB order? Seems pretty wild. Trying to figure out if I should open an account at IB or Fidelity… Fidelity seems more expensive, but perhaps more user friendly for global stocks. Thanks in advance. Link to comment Share on other sites More sharing options...
wknecht Posted January 8, 2014 Share Posted January 8, 2014 Have been reading through the thread and the financials. The minority interest is still unclear to me. Treating MI as debt in the multiple/leverage calculations, shouldn't the payments be treated more like the bond payments and "capitalized" instead of using the balance sheet amount? So capitalizing at 9.75% (consistent with the bonds, i.e., not using the 7.5% par yield) adds EUR 255mm (25mm/9.75%) of debt and brings EV to roughly 1,000mm (334 mkt cap + 561 debt + 255 MI - 150 cash), EV/EBITDA to 5.1x, Net debt/EBITDA 3.4x. This of course isn't quite right because the the 25mm isn't contractual, but I feel like this more appropriate than using the 75mm balance sheet value, no? Would be nice to know the terms. Link to comment Share on other sites More sharing options...
Packer16 Posted January 8, 2014 Author Share Posted January 8, 2014 The reason we are using the balance sheet value is the MIs are put on the balance sheet at there estimated FV at time of being included. Part of the problem with capitalizing the number is we don't know the details of the MIs and the 25m is just an rough estimate based upon a 5 year average of MI payments and the mix of these has changed over time. These payments vary all over the place also over time. Packer Link to comment Share on other sites More sharing options...
wknecht Posted January 8, 2014 Share Posted January 8, 2014 Fair point. The allocation percentages just seem to imply a higher value to me is all. Think I'll shoot a note to IR folks and ask about the typical terms. Thanks for the idea and thoughts Packer. Link to comment Share on other sites More sharing options...
Packer16 Posted January 8, 2014 Author Share Posted January 8, 2014 Let me know if you get a response. I have tried and got no response to my MI questions. Packer Link to comment Share on other sites More sharing options...
wknecht Posted January 9, 2014 Share Posted January 9, 2014 Yes will do. Just took a look at the report racemize posted the link for below. It seems they calculated EV as EUR 1.2mm in 2011 with MI of 314mm (at which time the balance sheet value was around 77mm). Might be easier to ask them, so will try shooting them an email also. 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...
Packer16 Posted January 9, 2014 Author Share Posted January 9, 2014 I have another analyst report from National Securities which subtract the MIs at BV of around Euro 48m. The report is dated July 2012. Packer Link to comment Share on other sites More sharing options...
racemize Posted January 9, 2014 Share Posted January 9, 2014 I have another analyst report from National Securities which subtract the MIs at BV of around Euro 48m. The report is dated July 2012. Packer Wait, do they add it as debt to the ev, or are they subtracting that much to get FCF? Or I'm just not sure what they are subtracting from? Link to comment Share on other sites More sharing options...
Packer16 Posted January 9, 2014 Author Share Posted January 9, 2014 Determine value on a consolidated basis then subtracting MI as debt to estimate equity value applicable to the common. Packer Link to comment Share on other sites More sharing options...
Hielko Posted January 9, 2014 Share Posted January 9, 2014 Does that approach make sense? The minority interest is an equity stake, and not debt, right? If you estimate that the equity is worth a premium to book value, the minority interest should be worth a premium to book value too. Or I'm I saying something stupid here? Link to comment Share on other sites More sharing options...
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