Great StockSlam event last night, great fun and nice to meet some first-timers pitching some very interesting ideas: a wonderful variety of choices, many with high 90+ StockRanks but credit to Neville pitching eServeGlobal on a SR of zero!

My StockSlam choice is online gambling company GVC Holdings (LON:GVC) (Gaming VC as it was originally called). They have just reported excellent H1 results and Q3 update. They are in the midst of integrating their audacious takeover of Ladbroke Coral, and despite the obvious potential for distraction, they state:

  • Lads integration “couldn’t be going any better”;
  • They are taking market share in all their key markets; and
  • Growth is accelerating (Q3 over H1), online net gaming revenue (NGR) +28% .

So, extremely impressive performance.

However, the really interesting feature is they have tied-up a twenty-five year 50:50 JV agreement with MGM the leading casino operator in the US market. We’ve been waiting a long time for the US online gambling market to open up and it’s happening right now.

Over the next five years the US market is predicted to become the largest regulated online gambling market globally. It is estimated that there is c. $150bn illegal underground gambling market in the US. IMHO I cannot foresee any other outcome than the MGM/GVC JV being the leading player in this market.

Clearly, execution risk is the biggest concern but GVC have an excellent track record of taking over much larger businesses and executing the integration perfectly:

  • Sportingbet (March 2013)
  • BWIN (Feb 2016)
  • Ladbrokes Coral (March 2018)

So, frankly I cannot see them cocking up this huge opportunity.
And you might expect GVC to be expensive, but no: p/e 11, PEG 0.5 and yield 4.12%. So they are extremely good value and with the exciting US market opportunity ahead they present a compelling proposition.

Disclosure: Maddox is long GVC

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