For one, 70% of PPB’s EBIDTA comes from its online business so she thinks Ladbroke Coral and William Hill are more vulnerable to tightening regulation around fixed odd betting terminals.
Also, she continues to be encouraged by the group’s international opportunities and its accelerated growth in Australia and the European market.
“The business is very cash generative, they have a strong balance sheet and with 12 to 18 months, I can see the potential for PPB to return cash to shareholders in the form of a special dividend or share buyback programme. Or they could complete additional mergers and acquisitions if they found the right deal that propels their growth further. The gaming space will continue to be ripe for further consolidation.”
Domestically, Ryan cautioned that investors should be mindful of the potential impact consumer confidence and discretionary spending could have on a stock like PPB.
“It is a consumer related stock with material domestic exposure so absolutely Brexit does matter,” she said. “We will be keeping an eye on employment data and consumer confidence generally, but I wouldn’t say it was one of the stocks I would be most concerned about in terms of the relative impact of Brexit.”
