Northland Capital partners view on Nektan PLC : As previously alluded to, the additional funding (£8m) not only places the business in a good position to execute on recently signed contracts in the US and white-label solutions in Europe, but should also provide firepower for further growth. At c. 24x FY16 consensus earnings the entry multiple appears relatively demanding when compared to other B2B gaming businesses however, investors will be looking at whether management is able to deliver on significant growth in FY16, which would justify a higher multiple rating in our view.
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Nektan (NKTN.L): Trading update |
| Market Cap: £38m; Current Price: 169p |
| FY15 Losses better than expected |
| n Net gaming revenue to June 2015 of c. £0.5m and adjusted EBITDA loss of £5.5m which is better than expected (£5.9m), this is mainly due to managing the cost base. The number of depositors and net gaming revenue more than doubled in the 4Q15 over the 3Q15 and this is highly encouraging.
n The outlook should be positive on the back of securing c. £8m of new funding recently, and should allow management to execute on its strategy and produce profitable growth and returns for shareholders. However, despite the Board being confident it can achieve significant revenue growth and produce profits this is expected to be at a lower level in the short term. n Looking ahead to June 2016 consensus is looking for EBITDA of £2.4m, and EPS of 7.1p which implies the business is trading on c. 24x FY16 earnings. |
