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.
This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.
ASR has no position in any of the stocks mentioned.