Packer16 Posted August 8, 2014 Author Share Posted August 8, 2014 I still think 9x is a good target both Bally Technology and Multimedia Games are trading in excess of 9x EBITDA. IGT was bought out at 7.4x and OPAP is trading at 7.6x. The lottery automation companies are trading at 3.4x (Intralot) to 6.0x EBITDA (Rexnet). Of two two, I like Gtech as it is less expensive has less debt and has better management than SGMS. SGMS is controlled by Ron Perleman. Gtech appears to have declined ever since they announced the IGT merger as they paid a multiple in excess of there own for Gtech. The nice aspect of the lottery side of the business is the recession proof nature which is not being reflected in the stock prices. Packer Link to comment Share on other sites More sharing options...
tombgrt Posted August 8, 2014 Share Posted August 8, 2014 Thanks Packer, much appreciated! Link to comment Share on other sites More sharing options...
jeremykgold Posted August 14, 2014 Share Posted August 14, 2014 http://intralot.com/content/3162/intralot-1h14-financial-results-strong-sales-growth-resilient-ebitda-robust-cash-flow Q2 2014 Link to comment Share on other sites More sharing options...
tombgrt Posted August 18, 2014 Share Posted August 18, 2014 Thanks. I guess they should have done some of that FX hedging. If I remember correctly, last Q there was a CC replay available for a few days. Does anyone know how to access it? I can't seem to find it on the website for this Q. Link to comment Share on other sites More sharing options...
tombgrt Posted August 18, 2014 Share Posted August 18, 2014 you have to go to the announcements part. Now, as to how to find the presentations, I have no idea. The only way I've gotten them is via google, not their site. This post helped me find it, thanks! http://www.intralot.com/content/502/athex-announcements then: http://www.intralot.com/content/3158/conference-call-invitation-thursday-14th-august-2014 Link to comment Share on other sites More sharing options...
racemize Posted August 18, 2014 Share Posted August 18, 2014 I haven't gotten to the call--can you let us know if there is anything interesting? Link to comment Share on other sites More sharing options...
tombgrt Posted August 18, 2014 Share Posted August 18, 2014 I was at work and only found out now that you have to call in, no web version available. :( Maybe Packer or someone else has been or will be able to listen to the call later on. Link to comment Share on other sites More sharing options...
Phaceliacapital Posted August 20, 2014 Share Posted August 20, 2014 Maybe this helps:2014Q2_CALL.pdf Link to comment Share on other sites More sharing options...
tombgrt Posted August 20, 2014 Share Posted August 20, 2014 That's great, thanks Phaceliacapital! Link to comment Share on other sites More sharing options...
argonaut Posted August 20, 2014 Share Posted August 20, 2014 Looks like they extended their Washington DC contract by 5 years through 2020 now (July 2014 report)...all good. Link to comment Share on other sites More sharing options...
Kiltacular Posted August 21, 2014 Share Posted August 21, 2014 detailed press release: http://intralot.com/sites/default/files/INTRALOT%20Press%20Release%206M14.pdf financials: http://intralot.com/sites/default/files/INTRALOT%20(Fin.%20Stat.%20-%20Full%20Notes)_0.pdf Link to comment Share on other sites More sharing options...
tombgrt Posted August 21, 2014 Share Posted August 21, 2014 Does anyone have more insights in the distribution of revenue over the years? Most growth seems to come from Sports betting (50% of revenue) that has the lowest margins by far, obviously helped by the World Cup as well. AWP and VLT seems to grow nicely and I assume margins are slightly higher here? Does anyone know what average sector margins are and how Intralot relates to it? I think I once saw a nice break up of all revenues and margins and evolution in a presentation but I can't seem to find it back. Hard enough company to understand without the difficult to navigate website. Link to comment Share on other sites More sharing options...
skanjete Posted August 21, 2014 Share Posted August 21, 2014 I continue to have problems with the understanding of the minorities. The discrepancy between the profit attributable to the equity holders and the profit attributable to the minorities seems to grow over time. On a basis of total enterprise value (incl. minorities) to EBITDA, the company is very cheap. However, I can't shake the impression that the minorities mainly own the best and profitable parts of the company and the equity holders mainly the losing parts of the company. And this difference seems to widen over time. The cash flows (dividend minorities vs. dividend parent) also seem to confirm this over the years. Link to comment Share on other sites More sharing options...
phil_Buffett Posted August 30, 2014 Share Posted August 30, 2014 http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/chou-semi-annual-report-2014/ Francis chou bought some intralot in his european fund. great! maybe after reading all the Posts from this board on intralot. ;D Link to comment Share on other sites More sharing options...
finetrader Posted August 30, 2014 Share Posted August 30, 2014 On a basis of total enterprise value (incl. minorities) to EBITDA, the company is very cheap. However, I can't shake the impression that the minorities mainly own the best and profitable parts of the company and the equity holders mainly the losing parts of the company. And this difference seems to widen over time. The cash flows (dividend minorities vs. dividend parent) also seem to confirm this over the years. Agreed! That is why I passed on this company Link to comment Share on other sites More sharing options...
Packer16 Posted August 30, 2014 Author Share Posted August 30, 2014 The minorities are where most of the currency risk is (thus the large currency losses every quarter) so the other parts of the business are in more stable parts of the world. Part of the thesis here is the company is in a good business that is consolidating. Historically, the company has been the laggard in terms of performance and the plan is to improve performance. However, given the pace of consolidation and the prices paid for comps such as Bally Technology and IGT, this company may be more of a near-term acquisition target than anything else. If a strategic purchased them, the industry would be down one price competitive competitor and the value would be accretive as the current multiple for Intralot is so low (40% below the comps). The payments to minority interest holders has ranged from Euro29m to Euro16m per year for the last 4 years. This YTD it is Euro18m. I reduced the EBITDA by Euro30m amount to account for the CFs to the minorities. Packer Link to comment Share on other sites More sharing options...
plato1976 Posted September 7, 2014 Share Posted September 7, 2014 Just don't see when Intralot can show us huge FCF or very meaningful growth The minorities are where most of the currency risk is (thus the large currency losses every quarter) so the other parts of the business are in more stable parts of the world. Part of the thesis here is the company is in a good business that is consolidating. Historically, the company has been the laggard in terms of performance and the plan is to improve performance. However, given the pace of consolidation and the prices paid for comps such as Bally Technology and IGT, this company may be more of a near-term acquisition target than anything else. If a strategic purchased them, the industry would be down one price competitive competitor and the value would be accretive as the current multiple for Intralot is so low (40% below the comps). The payments to minority interest holders has ranged from Euro29m to Euro16m per year for the last 4 years. This YTD it is Euro18m. I reduced the EBITDA by Euro30m amount to account for the CFs to the minorities. Packer Link to comment Share on other sites More sharing options...
Packer16 Posted September 12, 2014 Author Share Posted September 12, 2014 This is the last of the remaining gaming/lottery companies not purchased by another firm. MGAM just got purchased by CGA. This should get interesting. Packer Link to comment Share on other sites More sharing options...
investor-man Posted September 13, 2014 Share Posted September 13, 2014 This is the last of the remaining gaming/lottery companies not purchased by another firm. MGAM just got purchased by CGA. This should get interesting. Packer Interesting... I have MGAM at 9.51x EBITDA at the current price and 10.51x with the $40.00 price target that is suggested in some articles. At 10.51x, I have Intralot at 7.88 euro (I have 4.61x EBITDA for Intralot), a 300+% increase. But MGAM is a WAAAY better business, and if I were spending my money to buy either company, I'd definitely pay more for MGAM. I'd have to think through what multiple I'd be indifferent to buying either -- not sure I'm really qualified to answer that question. Unfortunately Intralot is a pretty bad company. Of the comps I've looked at, it's the worst. GTECH is probably the closest, but it's still a better company. GTECH is trading at 5.9x EBITDA right now, so I'd price Intralot lower than that. At 5.9x EBITDA, I have Intralot at 3.17 euro, which is 75% increase. Any comments from anyone? This seems somewhat inline with what Packer described in the opening post. Link to comment Share on other sites More sharing options...
yadayada Posted September 13, 2014 Share Posted September 13, 2014 what bothers me is lack of cash flow, together with this being a greek company (auditor is never really a fail save against this, just study other frauds). And one of management really reminded me of a greek george costanza in an interview :) : https://www.youtube.com/watch?v=lYRnWGuRqG8. (skip to 2 minute mark lol) It is growing, but still cash flow is lagging so far behind earnings. Also the very poor visibility. Still can't get my head exactly around minority interests. That seems like an incentive for fraud. And looking at their investments it doesn't look like they are really paying off very well. And most seem like crappy gambling websites with little traffic. If you value this based on ev/ebitda you basicly hope for a buyout. Also I have a little bit of experience with greeks now, and it seems they all try to fk you. So that probably biases me. Link to comment Share on other sites More sharing options...
investor-man Posted September 13, 2014 Share Posted September 13, 2014 what bothers me is lack of cash flow, together with this being a greek company (auditor is never really a fail save against this, just study other frauds). And one of management really reminded me of a greek george costanza in an interview :) : https://www.youtube.com/watch?v=lYRnWGuRqG8. (skip to 2 minute mark lol) It is growing, but still cash flow is lagging so far behind earnings. Also the very poor visibility. Still can't get my head exactly around minority interests. That seems like an incentive for fraud. And looking at their investments it doesn't look like they are really paying off very well. And most seem like crappy gambling websites with little traffic. If you value this based on ev/ebitda you basicly hope for a buyout. Also I have a little bit of experience with greeks now, and it seems they all try to fk you. So that probably biases me. Heh, I think if they were trying to "fk" investors by way of auditors, the business would probably look a little better :) It's a crap business, but there is a business running there. I'd imagine there's a lot of low hanging fruit that if cleaned up would make some money. Link to comment Share on other sites More sharing options...
Packer16 Posted September 13, 2014 Author Share Posted September 13, 2014 The business is making money. Just not as much as it should. I think the business they are in is fine but the management is not so hot. This is typically the case where an acquirer can buy and realize synergies by running the business properly. The whole lottery space is pretty cheap. GTech is probably the highest quality name that sells at a discount from history. If this business is too ich for you then I think Gtech is another name but has less upside. Packer Link to comment Share on other sites More sharing options...
tombgrt Posted September 16, 2014 Share Posted September 16, 2014 Most names recovered quite a bit after the low last month. SGMS almost doubled. Intralot however is close to new 52-week lows. I bought a little more today. Link to comment Share on other sites More sharing options...
jmaes Posted September 20, 2014 Share Posted September 20, 2014 Some former employees of Intralot say it's possible for Intralot employees to manipulate the Dutch lottery. There is complete access to the file with lottery numbers, and those numbers can be changed or removed by employees without a trace. http://www.demorgen.be/dm/nl/990/Buitenland/article/detail/2056843/2014/09/20/Nederland-in-rep-en-roer-is-er-gesjoemeld-met-loterij.dhtml (sorry, it's in dutch) Link to comment Share on other sites More sharing options...
tombgrt Posted September 20, 2014 Share Posted September 20, 2014 Maybe a bit too much hair here. I guess we now know why it is trading the way it is. Link to comment Share on other sites More sharing options...
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