NYX GAMING GROUP LTD 11 PCT DEBS V.NYX.DB

My Q1 Preview and Resulting Valuation…

[93Darkhorse93]

They already told you how strong their Q1 numbers are going to be. Trading at 2x EBITDA it can’t get much cheaper and I think Eric Nutall’s comments were very telling of larger institutional investors that when they come back will move the stock huge if they can just deliver on what they guided to in the Q4 release.  So essentially you get to get in on Monday ahead of the figures for an absolute steal as you already know how good Q1 number are to recap;
 
Revenue – 59M up 8% QoQ and 200% YoY (at the midpoint)
EBITDA – 16M up 24% QoQ and 230% YoY (at the midpoint)
 
This guidance was given in the end of April after Q1 was over so they clearly are going to hit the numbers.

The inherent operational leverage is huge here as they begin to get costs under control as a 8% increase in revenue is able to generate 3x or 24% improvement in EBITDA.  Throw on top of that real solid insider buying since Q4 and analysts only projecting out 8% YoY Revenue growth in 2018 when they are growing at that rate QoQ there is a lot of upside.
 
Projecting Out for 2017: Revenue of 250M with a strengthening EBITDA margin as the year progresses for annual EBITDA of 70M, with out year Revenue of 280M with improving EBITDA margins to 92.5M.
 
On Valuation: putting a 6x multiple on 2017 EBITDA gets you a target price of 3.80/share and if you adjust for Enterprise Value and a 12x EV/EBITDA multiple on it gets you to a 2.00/share for a blended price target of 2.90/share 155% upside.
 
As the debt level comes down more and more value shifts back to the equity holders and you will get a significant rerating of the equity.
 
 
LONG