Integrity Gaming Corp. V.IGAM

RE:RE:New Coverage

[Riverfolk]

Poydras Gaming Finance Corp. (PYD-V) - Initiating Coverage

 

Target: $0.50
Rating: SPECULATIVE BUY

 

 

We are initiating coverage of Poydras Gaming Finance Corp., (“Poydras” or “the Company”) with a Speculative Buy rating and target price of $0.50 per share. Poydras, based in the U.S. and Canada, provides innovative leasing and financing solutions to the land based gaming industry – i.e., casinos and other gaming venues. 
 
Earlier this year we had the opportunity to visit Poydras’ Tribal Casino customers in Oklahoma and had detailed discussions with management and customer representatives. Poydras, in our opinion, is uniquely positioned to grow into a specialist gaming finance company with high margins and consistent cash flow and we anticipate the stock’s valuation to catch up to intrinsic value as the Company’s slot machine footprint expands. For investors with a medium to longer-term investment time frame, Poydras offers an appealing investment opportunity in the small cap space with the potential for further share price appreciation.
 
Although the stock has been range bound in the months after its listing via a reverse takeover (RTO), we believe that with improved results in H2/F14 and beyond, the stock has  potential for appreciation. Catalysts for the stock include: (i) Growth in overall slot machine footprint; (ii) Acquisition of slot routes at an accretive valuation; (iii) Further penetration of the California tribal gaming market (largest tribal gaming market in the U.S.) by expanding existing customer relationships and acquiring new customers; (iv) Expansion of operating margins from operating leverage in the business; and (v) Potential dividends in the future.
 
Key risks for investors include an economic downturn, adverse regulatory developments, departure of key management personnel, and lack of timely access to capital.