The long awaited listing of Jackpotjoy shares in the United Kingdom may begin to tighten the valuation gap between Intertain Group (Intertain Group Stock Quote, Vhart, News: TSX:IT) and its more expensive peers, says Mackie Research Capital analyst Nikhil Thadani.
This morning, The Intertain Group said it expects Jackpotjoy will begin trading on the London Stock Exchange on January 25.
“We are excited to have reached this milestone in the implementation of our United Kingdom strategic initiatives, including the London listing of Jackpotjoy PLC,” said CEO Andrew McIver. “We believe that these initiatives will provide a platform to further develop Intertain’s core assets for the long-term benefit of the company, its shareholders and other stakeholders.”
Thadani says the UK listing could go a long way towards getting Intertain to trade in-line with its peers, a development that would have major upside for shareholders.
“(The) UK listing news (is) a very important and much awaited step in removing lingering governance doubts and starting move towards closing valuation gap with peers,” says Thadani. ” IT traded at <8x 2017 EV/EBITDA (inc. earn outs) prior to being halted this morning vs. most peers trading in the ~8-11x range (excluding an outlier) and average of ~12x. Every 1x multiple increase corresponds to a ~$3/sh stock price upside. Recall, we have consistently preferred to value IT on an EV/EBITDA basis (including earn outs) vs. a P/E approach, which would make the stock appear more attractive, albeit artificially.”
In a research update to clients today, Thadani maintained his “Buy” rating and one-year price target of $20.00 on Intertain Group, implying a return of 113 per cent at the time of publication.
Thadani expects Intertain will post EBITDA of $174.2-million on revenue of $479.9-million in fiscal 2016. He thinks these numbers will improve to EBITDA of $182.5-million on a topline of $494.2-million the following year.
About The Author /
Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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