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Jumbo Interactive (ASX: JIN) has released a trading and COVID-19 update to the market today. Work from home initiatives has been put in place with minimal impact on operations. Prior to the onset of COVID-19, approximately 75% of lottery tickets were sold in-store. With the current unprecedented market conditions, management is taking a cautious approach to estimating business performance over the remaining financial year. JIN expects EBITDA in the range $38.7 – $40m and net profit after tax (NPAT) in the range $24.4 – $25.3m. These figures are below current consensus expectations of $45.2m and $28.6m for FY20 EBITDA and NPAT, respectively. Furthermore, the business has also maintained its dividend policy of 85% pay-out ratio.
Jumbo Interactive (ASX: JIN) has released a trading and COVID-19 update to the market this morning. (Credit: Proactive Investors Australia).
As retail stores close, we believe the demand for online lottery sales should increase, providing a near-term tailwind for Jumbo’s business. That being said, the largest demographic to purchase lotteries are the elderly and may feel reluctant to switch online. It is difficult to gauge the direct correlation between the outbreak and total transaction value for the business, however, we do believe management is being conservative in its guidance.
It appears that the shift from store to retail lotteries could provide upside and will happen over the next few years. In the near-term, this may be sped up.
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