Betmakers Technology Group Ltd

BET Details

H1FY21 Performance Update: Betmakers Technology Group Ltd (ASX: BET) is engaged in the development and provision of data and analytic products for the B2B wagering market. The market capitalisation of the company as on 17 March 2021, stood at ~$760.08 million. The company has recently announced its H1FY21 results and reported a decent increase in revenue to $7.59 million, an increase of ~88% on the previous corresponding period. It reported an underlying EBITDA of $0.04 million and a closing cash balance of $68.6 million.

H1FY21 Financial Performance (Source: Company Reports)

Matt Tripp Leads Strategic Placement Round: On 17 February 2021, the company had announced that online wagering industry leader Matt Tripp has partnered with it to accelerate the growth of its B2B wagering strategy. It has agreed to subscribe for $25 million of new BET shares at an issue price of $0.70 per share. The company has also received commitments of $50 million from several existing investors.

Outlook: The company has announced that the proposed acquisition of Sportech’s tote and digital assets is on track and is expected to be completed during the next financial quarter. The transaction is expected to contribute significant earnings to the consolidated business entity. The New Jersey bill, which authorizes fixed odds wagering on horse races through a fixed odds wagering system, has been introduced in the New Jersey Legislature. The bill is expected to progress during the first half of CY21.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Data Source: Refinitiv, Thomson Reuters, Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: There was an improvement in the liquidity of the company with current ratio at 31.29x during the end of H1FY21, compared to 3.52x in the prior corresponding period. As per ASX, the stock of BET is trading above its average 52-weeks’ levels of $0.081-$1.080. The stock of BET gave a positive return of ~481.81% in the past one year and a positive return of ~123.25% in the past six months. On a technical analysis front, the stock of BET has a support level of ~$0.836 and a resistance level of ~$0.973. We have valued the stock using an EV/Sales multiple-based illustrative relative valuation and have arrived at a target price with a correction of low single digit (in % terms). We believe that the company might trade at a slight premium to its peer average EV/Sales (NTM trading multiple), considering the improvement in the top-line performance and its strategic tie-up with Matt Tripp. For the purpose, we have taken peers such as Skycity Entertainment Group Limited (ASX: SKC) Aristocrat Leisure Limited (ASX: ALL), Jumbo Interactive Limited (ASX: JIN), to name a few. Considering the valuation, steep price movements in the past few months and the key risks associated with the business, we are of the view that most of the positive factors have been discounted at current trading levels. Hence, we suggest investors to wait for a better entry-level and give an ‘Expensive’ rating on the stock at the current market price of $0.960, down by 2.041% as on March 17, 2021.

BET Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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