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Jumbo Interactive Ltd (ASX: JIN)
JIN is engaged in the sale of lottery tickets through the Internet and mobile devices. Through the SaaS segment, it licenses the JumboLotto lottery software platform to customers nationally, including to ozlotteries.com, and develops and maintains the JumboLotto platform. As of 30th November 2021, the market capitalization of the company stood at ~AUD 1.06 billion.
Financial & Operational Updates – As recently announced, the company’s UK business, Gatherwell, exceeded its revenue and profit targets in FY21 and triggered the second and final earn-out payment of GBP 1.0 million (about AUD 1.9 million). JIN acquired Gatherwell for consideration of GBP 5.0 million for with an initial cash payment of GBP 3.0 million. For FY21, JIN posted a double-digit TTV growth of 37% to reach AUD 487.0 million. Revenue went up 17%, driven by its SaaS segment, which had witnessed an increased offtake from Australian clients. Net profit was reported at AUD 26.96 million, up by 4.2% over PcP. In the trading update, the company’s posted a 28.4% increase in TTV for Q1FY22 and reported revenue grew by 19.7% to reach AUD 25.49 million.
Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation (Illustrative)
Stock Recommendation: Over the past six months, the stock has provided a positive return of ~16.76% and is trading above the average 52-week price level band of AUD 12.260 and AUD 18.560. The stock has been valued using an EV/EBITDA multiple based illustrative relative valuation method and arrived at a target price with a downside of high-single-digit (in % terms). For the purpose of valuation, peers like Betmakers Technology Group Ltd. (ASX: BET), Ainsworth Game Technology Ltd. (ASX: AGI), Aristocrat Leisure Ltd. (ASX: ALL) have been considered. The company can trade at a slight premium to its peers, considering the improved Q1FY22 sales and TTV growth. Considering the recent rally in share price, recurring revenue model, favourable FY21 performance, current trading levels, valuation indicating downside, and key business risks, we suggest investors to “Sell” this stock and book profit at the current market price of AUD 17.740 per share as of 30th November 2021, 12:09 PM (GMT+10), Sydney, Eastern Australia.
Daily Technical Chart – JIN
Source: REFINITIV
Note, purple color line at the bottom of the chart depicts RSI (14-day period) and yellow color line is the trendline.
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.
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