DB sees exposure to unregulated markets as risk for Nordic online gaming cos

Betsson AB

26/10/2021 14:05

** Deutsche Bank initiates coverage of three largest Swedish
online gaming companies, Kindred  KINDsdb.ST , Betsson
 BETSb.ST  and Evolution  EVOG.ST , noting the Nordic markets
"have spawned three of the world's leading online gaming stocks"
    ** The broker says slowing growth and rising regulatory cost
in the region have pushed the online gaming operators to
aggressively expand into international markets, with an
unregulated risk appetite 
    ** In its view the unregulated markets deliver more growth,
but earnings are of lower quality, given the negative impact on
profits when regulation is introduced
    ** It also says the sector has been impacted by a strong
trend towards socially responsible investment (ESG), with
Scandinavian funds reducing their sector exposure
    ** DB initiates Kindred with "buy," citing the company's
strong technology and balance sheet, estimating it will be over
80% regulated by 2023    
    ** It has a "hold" stance on Evolution, pointing to its
stretched valuation, operating on high risk markets such as
Turkey, Malaysia and China, where other listed companies have
been "too nervous to go" 
    ** The brokerage starts Betsson with "sell" as it believes
the company's valuation does not fully discount regulatory risk
-- the business had high exposure to the Netherlands and
Germany, where it faces regulatory challenges
    


 (Reporting by Marta Frackowiak)
 ((marta.frackowiak@thomsonreuters.com))