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Intertain posts winning Q4 results, to benefit further from Jackpotjoy deal

Published: 05:03 11 Mar 2015 AEDT

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Online gaming company Intertain Group (TSE:IT), which recently announced a $650 million acquisition of the Jackpotjoy bingo business from UK-based Gamesys, reported solid fourth quarter top and bottom line results.

The company posted, after market Monday, revenue of $18.3 million, handily beating consensus estimates of $14.9 million.

Adjusted earnings per share were 22 cents for the quarter, topping views of 21 cents.

Dundee Capital Markets analyst Eyal Ofir said every segment contributed to the growth, with Mandalay Media growing 16 percent quarter-on-quarter, while the InterCasino business "exhibited another strong quarter with both NGR and GGR up almost 40% sequentially to $1.5 million and US$5 million."

Meanwhile, the JackpotJoy brands are already performing ahead of the company's earn out target, Dundee noted.

Jackpotjoy has a database of 1.4 million players, but more importantly, hosts more than 100,000 monthly active players. Real-Money Jackpotjoy, which launched in the UK in 2002, has number one market share in the UK, with over 100,000 monthly active users across the UK, Eire and Sweden.

"The Gamesys' B2C assets (JackpotJoy and others) generated strong results in the quarter with almost $60 million in revenue and $28.5 million in adjusted EBIT (excluding acquired intangibles)," wrote Ofir.

"Management further noted that based on January 2015 results, these assets are already trending ahead of the adjusted EBITDA earn out target of £63.1 million."

The acquisition of these assets is expected to close in the first week of April. Dundee said that on a pro-forma basis, all of the Intertain assets would have generated total revenue of $90 million for the period.

"From our perspective, the pro-forma metrics provided on the conference call only further support the upside potential of the story," said Dundee's Ofir, who has a buy recommendation and C$25 target price on Intertain.

"With this acquisition, Intertain has executed a game changing transaction that allows it to gain mass scale in the bingo space with recognized brands in a number of key regions."

Intertain is planning to leverage this to expand into new markets, particularly in the Nordic region, and new countries across Europe, as well as into Latin America.

Dundee projects fiscal 2016 revenue of $372 million for Intertain, on adjusted earnings of $1.72 per share.

Shares of Intertain were up 3.7 percent at C$15.85 on Tuesday afternoon, stretching year-to-date gains to almost 20 percent.

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