- Shares lead rally in FTSE 100 index
- Market seen growing significantly
- More M&A as expansion continues
Shares in gaming and betting company Entain (ENT) topped the FTSE 100 leader board with a gain of 6% to £13.86 after the group posted an upbeat first half trading statement and announced its expansion into central and eastern Europe.
Chief executive Jette Nygaard-Andersen believes the size of the firm’s addressable markets could treble over the long term to around $170 billion annually.
GROWTH RUNWAY
Entain’s growth strategy rests on four pillars: growing in its core markets, establishing a leading position in the US, expanding into new regulated markets both organically and via acquisitions, and moving into new interactive entertainment markets.
In the six months to June, the number of active customers hit a new record up 57% on the same period of 2019, while total net gaming revenue rose 18% on last year to £2.1 billion.
Online revenue was down 7% reflecting the very strong results from 2021 as well as a temporary shutdown in the Netherlands, which knocked 4% off online growth.
Retail revenue was better than expected ‘with a more interactive digital experience across gaming machines and betting terminals driving greater customer engagement’.
BetMGM performed strongly, generating revenue of $608 million up 65% on last year, and is on track to deliver full year net gaming revenue of over $1.3 billion.
Group EBITDA (earnings before interest, taxes, depreciation and amortization) grew 17% to £471 million and the company reiterated its full year profit target would be in the range of £925 million to £975 million, in line with market forecasts.
GO EAST
As part of its strategy to find new growth markets, the firm announced it had formed a joint venture with Czech investor EMMA Capital to drive its expansion in Central and Eastern Europe.
Entain will own 75% of the economic rights of the venture, to be known as Entain CEE, through the acquisition of Croatia’s leading gaming and sportsbook operator SuperSport Group from EMMA.
The total cost of the deal is just under €700 million, with €600 million payable on completion and an additional €90 million payable in early 2023 based on SuperSport’s full-year EBITDA.
The €5 billion Central and Eastern European gaming market is seen growing by around 10% per year and is currently highly fragmented, presenting a major opportunity for a savvy industry-leading operator to move in and take market share.
SuperSport is already the number one player in Croatia with a 54% market share and has regularly generated EBITDA margins north of 50% with 90% cash conversion.
Alongside this deal, Entain revealed it had acquired businesses in Canada, Latvia, the Netherlands and Poland.
