Straws are discrete research notes that relate to a particular aspect of the company. Grouped under #hashtags, they are ranked by votes.
A good Straw offers a clear and concise perspective on the company and its prospects.
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I was going to write a straw about why I'd sold out of Environmental Group (EGL) on the basis that I felt the Board has structured the performance scheme such that all the company's growth is being given directly to the CEO and CFO, via excessive performance options set with too low a bar. Then I saw Betmakers result. Holy guacamole Batman...
If someone can make sense of note 34 such that it ties back to anything close to $71m you're doing better than me.
[Not held]
I find it almost impossible to put a meaningful valuation of this company due to the extreme growth in revenue, expenses and share count particularly over the previous 12 months.
I see that @TEPCapital attempted a valuation approximately 1 year ago based on Q on Q growth of 75% and estimated FY22 revenue of $162M. Valuation of $0.95.
Here are the challenges:
1. Revenue growth of 370% FY22 over FY21.
2. Expenses growth (estimated) ~100%.
3. Share count growth ~26%.
On review of the Q4 FY22 Investor Presentation there are some considerations to guide future predictions:
1. There were 10 active platform clients at 31/12/21. 18 Platform clients at 30/6/22. They estimate 25 active platform clients at 31/12/22. I expect this rate of growth can’t continue?
2. BET have invested heavily in growing the global TOTE business and adding platform clients. These investment spends are ahead of the growth curve and cash flow benefits will follow. This is evidenced via the extreme revenue growth numbers.
3. Current turnover of $2B is 85% Australian Market. There are numerous global betting services deals that are yet to contribute to revenue. Penn National Gaming went live 1/7/22, Monmouth Park live July 2022. Other deals include Caesars(US), South America, Ontario, Norway…
4. $87.6M in cash and no debt at 30/6/22.
5. Lots of opportunities to invest globally but have the option to buy back shares if this is the best investment opportunity.
My valuation is based on:
1. Annual revenue growth of 50% reducing to 10% over 10 years.
2. Expenses growing at 25% reducing to 10% over 10 years.
3. Share count growing at 5% over 10 years (reduced rate due to possible buy back).
4. PE of 20 at Year 10. Discount rate of 15% due to high risk
Today’s valuation $1.90
do you think BET is significantly undervalued? Reading through the threads and valuations, like the picks and shovels angle…
I bought into BET irl in the $0.90's when it was disclosed that Matthew Tripp (launched both Sportsbet & BetEasy which he sold both for considerable profit) became involved in the company given he is an extremely smart operator in this space. Then came the perplexing attempted takeover of TAB's bookmaking operations that ulimately fell over and the stock has been on a downward trend from a peak of over $1.50 since. This is a high risk play, they have some very lofty growth expectations built into the price but have a classy and experienced leadership team.
BET is currently in a trading halt. One would assume it would relate to the recent media speculation over the past couple of months regarding News Ltd and Matthew Tripp (creator of BetEasy and Sportsbet) launching a new betting agency. As the article linked below suggests, Betmakers will likely supply the OS for the new operation given Tripp is an advisor to the company too
https://www.smh.com.au/business/companies/news-corp-settles-on-bookmaking-launch-with-tripp-partnership-20220419-p5aeja.html
BET too, is heading in the right direction.
Q1 FY22 Quarterly Activities Report for the period ending 30 September 2021
$21.0 MILLION IN CASH RECEIPTS - UP 135% ON PREVIOUS QUARTER
Quarterly highlights
BetMakers Chief Executive Officer, Todd Buckingham said:
“The past quarter is a very pleasing result for the Company. We have seen an impressive uplift on our strong base of domestic operations while also capturing growth in global markets that were identified by the Company as opportunities for us to expand our B2B wagering technology products and services globally.
“BetMakers has a very clear strategy for growth in Australia and the United States, and is investing in the US opportunity, which we believe has the potential to be significant. Our rollout for Fixed Odds in the US, starting in New Jersey, progressed during Q4 FY21 after being passed unanimously by the Senate and General Assembly, and signed into law by the Governor of New Jersey. Everything is on track and we are excited about the journey ahead.
“The Company is now seeing the benefit of its acquisition of Sportech’s racing, tote and digital assets. This material acquisition is a cornerstone of our future plans, and we are delighted to have welcomed staff within these businesses into the BetMakers’ team.
“With a clear strategy, focused management, highly-skilled global staff and the opening up of sizeable opportunities across the world’s wagering markets, we believe BetMakers is well placed to build upon the foundations it has now established.”
DISC~I hold in RL & SM
https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02441831-2A1333787?access_token=83ff96335c2d45a094df02a206a39ff4
EDIT~added link details
Financial Overview
BetMakers is well positioned to continue to deliver strong growth in its domestic market as well as key international markets including the US
https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02358147-2A1289592?access_token=83ff96335c2d45a094df02a206a39ff4
DISC~I hold
MATT TRIPP LEADS $75M STRATEGIC PLACEMENT INTO BETMAKERS
HIGHLIGHTS:
• Matt Tripp signs exclusive partnership with BetMakers
• Acceleration of BetMakers’ global B2B wagering strategy
• Top institutional funds continue their support for BetMakers
• $25 million investment by Matt Tripp
• CEO Todd Buckingham signs new 3-year commitment to drive next phase of growth
DISC: I hold
Q2 FY21 Quarterly Activities Report For the period ending 31 December 2020 QUARTERLY HIGHLIGHTS
• Strategic acquisition of the Sportech Racing and Digital Assets
• Clear pathway for Fixed Odds legislation on Horse Racing in New Jersey
• Expected net cash of more than $35.0M post completion of the Acquisition • Cash receipts for the 1H FY21 up 90% on previous half
• Annualised cash receipts at $16.0M
DISC:I Hold
BET-sign-Fixed-Odds-and-Global-Distribution-Deals-in-Jamaica
Highlights
· Exclusive agreements with Supreme Ventures Racing and Entertainment Ltd
· 5-year deal to manage Fixed Odds on all racing at SVREL venues and online in Jamaica
· 5-year deal to distribute Jamaican racing from Caymanas Park internationally
DISC: I hold shares