Welcome to the club Tom and thanks for the writeup Rick. This one has been beaten down very far below the 200 day moving day average and seems to be very cheap using McNiven. However, I still have some reservations that make it hard for me to narrow my valuation range.

The main thing that worries me? Up until now Jumbo has been a bit a full lottery play which is a defensive play that typically holds up well when times get tough. What I cant currently guarantee is how resilient the dream car giveaway market is during the current environment with high petrol prices and increased uncertainty fare on the willingness to buy these types of tickets. These headwinds that they are facing are the exact inverse of the tailwinds that saw these businesses skyrocket in interest during the COVID period. We have already seen an almost doubling of the marketing expense for lottery, so its not that far a stretch to see some of these costs increase in a higher cost of living environment.

I know that the full impact of the 2 x acquisitions didn't hit the full financial year, but right now I'm struggling to see them make the 200m revenue target this financial year (36% increase from H1). The range of analysis puts them in the $33-40m NPAT range, which equates to around a 20% NPAT margin (which tracks based on their history) taking into account some potential slowdown in ticket sales and a jackpot cycle that hasn't shot the lights out this half.

That said, I feel that a large element of the current price relates to the continued negative momentum of the share price over the last 12 months, paired with the SAAS crash/AI opportunities. My updated valuation also sits around the $9 range, as long as they don't have any significant changes/downgrades this FY. I just don’t have the confidence in the figures right now.

As they say, fortune favours the brave and right now, that's not me.

As a shareholder, I'm hoping this one can reverse the current price trajectory and also reward you for your analysis and accumulation at these prices.

Disc: Held IRL 2% and SM 5% (expecting to trim after earnings)

@tomsmithidg @Rick and @SudMav I was fortunate to attend a meeting last night where Mike Verveka gave a detailed presentation on the business. He is surprised and frustrated with the current sentiment, particularly given he also owns 15% of the business. The key takeaways for me were -

• He expects about $88 million of EBITDA for this year
• He expects over $100 million in EBITDA for FY27
• The UK acquisition is going very well so far
• The US acquisition is no where near as sophisticated or high frequency as the UK. But thats why he bought it (off Private Equity who weren't running it well), so that he can bring Jumbos polish to it in the next few years.
• No new acquisitions planned and no new countries needed. But if the latest two go well over the next couple of years, then there could be another bolt on or two after that
• Now that TLC have locked in another 40 years of running the lottery this month, it's probable Mike will try and nut out an extension to the TLC agreement over the next year or so.
• Debt has already been paid down to around $90 million and they intend to continue to pay it down for the next couple of years
• Despite that, with the fall in the share price the dividend is back up to around a 5% yield even with the reduced payout ratio

I'm very happy with the business and leadership. It is a screaming bargain at these levels from what I can see. And profitable, growing businesses like this, that pay healthy dividends, could very well re rate quickly given what the government has just announced re CGT changes...

My bigger worry is Private Equity or a big International player lobs an offer at them that Mike just can't pass up. Otherwise, I expect around a 20% p.a. return for the next 5 years at the current price of $7.30.

@Karmast @tomsmithidg @SudMav Karmast thank you for sharing those meeting notes. That’s absolute gold! I believe I just recovered my Strawman subs in one straw! Where else do you get inside info like that?

Interesting that we both have independently arrived at 18% to 20% annual return on the current share price. Through different analysis I believe? I acknowledge there’s still a lot of risk ahead, however the potential upside looks probable, and your meeting with Mike has helped to confirm this.

Thanks @Karmast. Like @Rick said this has been a ripper update and addresses some of my conservatism around the business. Clearly I was wrong on this one!

$88m of EBITDA would be a cracking result and would definitely get them up pretty close to the $40m NPAT mark for the year.

Eagerly awaiting for the results and hopefully a nice big Powerball jackpot to close out the FY.