November 15, 2024 10:35 GMT
CONSUMER CYCLICALS: La Francaise Des Jeux; FV
CONSUMER CYCLICALS
(FDJFP; Baa1 Stable)
- WNG €500m 6Y; IPT +135a vs. FV +105 (-30)
- WNG €500m 9Y; IPT +155a vs. FV +132 (-23)
- WNG €500m 12Y; IPT +180a vs. FV +155 (-25)
- CoC, MWC, 3m par-call
- No firm view
- Comps including Flutter and IGT - latter provides services to FDJ. Note We expect eventual Flutter supply (€2.5b bridge loan, exp. 2Q25 close) and is a firm IG name that will screen value if it extends from current 29s.
- This is more staple in exposure (exclusive rights in France for national lottery and sports betting till 2044 - 20yrs) and has a clean BS. The monopoly is justified on "grounds of public order and the control of the risk of addiction".
- We have added PM (A2/A-) - a firm Tobacco name - as a ESG comp.
- The €2.5b acquisition of Kindred is beneficial in diversifying outside of France and into online gaming (though perhaps not for ESG).
- Moody's does consider it government related but does not notch up for from standalone Baa1. French government privatised it in 2019, maintains 20% stake.
- Targets net <2x, we see pro-forma at ~€1.4b of net debt which would leave it 1.6x levered on FY23 pro-forma EBITDA.
- Public equities with analyst coverage; FY24 outlook issued on 17 Oct is for revenue growth +9% with EBITDA margin >25%. Including Kindred +16% revenue and "around 25%" EBITDA margin.
- FY24 results a while away; 6 March 2025
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