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INTRO
Anders Ström founded Unibet in 1997 in London and received its license to operate in the United Kingdom in 1998. At the time, bets were taken over the phone before turning to computers with the rise of the internet. Through a series of acquisitions the group rapidly grew its customer base to over 300,000 by 2004 and expanded its presence to more than 100 countries.
Ström had set out to develop a product that would transform the way people gambled by capitalizing on emerging technologies
“Kindred believes a successful business is about future-proofing operations to generate profit and value in the long term.” Anders Ström
RAPID RISE
Unibet was granted its first license in 1998 to operate a betting business in the UK. The company quickly saw the potential for online betting and went digital by launching its first website in Swedish and English in 1999.
In 2000, Unibet Group Plc was founded and its first international license was granted in Malta. By 2001, Unibet was operating in over 50 countries with a website available in 12 different languages. In 2004, it was listed on the Stockholm Stock Exchange. That same year, it had over 300,000 registered customers in over 100 countries. In 2005, it launched a mobile platform and just two years later, in 2007, Unibet acquired Maria Bingo.
In 2012, Unibet would strengthen its position in Australia by acquiring Betchoice. In 2016, Unibet Group became Kindred and shifted to a multi-brand strategy with 13 different consumer brands in its portfolio. Over the subsequent years, Kindred would launch products in Romania, Sweden and the United States.
“The launch marks Kindred’s second online roll-out of Unibet in the US, having also introduced the brand to the New Jersey market in September […]” Rob Fletcher for iGB
As of the end of 2020, Kindred Group Plc had over 30 million customers worldwide, with gross winnings revenue of £ 1.1B and an after-tax profit of £ 165.2m.
GAMBLING FOR ALL
Kindred Group has grown to become a diversified gambling holding. It now hosts nine brands and hundreds of games on its different websites. These include mobile solutions, bingo games, poker, live gambling. Some of its games are localized as they are specifically designed for certain regions.
It is arguably the most recognizable and respected online casino with over 400 casino games powered by Microgaming. It offers casino entertainment in spades, bingo, poker and sports betting.
It is the top bingo brands in the Nordics. Acquired back in December of 2014, this brand offers bingo, casino and live casino games in an exciting gaming environment.
It is one of the most popular sites in Finland. It is an online casino with a wide selection of Scratch Cards, Slot Games, Video Poker, Live Casino and Jackpot Games.
This brand is known for its online casino, where players can choose exclusive slot games starring well-known entertainment brands such as Vares and Kummeli.
This is a female-focused gaming experience, with social responsibility being at the heart of the brand. It strives to prove that a world-class casino experience and harmful gambling can be dissociated.
This brand was launched in January of 2017 to cater exclusively to many high-roller players in Sweden and Norway. It is currently the only brand that caters to these customers.
This is Kindred Group’s premium all-product brand. It offers all types of sports betting, casino and games in 20 different languages across more than 100 countries.
This brand was launched in February 2018 to, specifically, cater to the Romanian Market. It is inspired by Romanian Heritage, traditions and mythology, but delivered with a fun, modern twist.
This is Kindred Group’s newest addition. Launched in the summer of 2020, it is the first Pay N Play casino in Kindred’s portfolio. So far, it has achieved a high level of customer verification and fast withdrawals by using bank IDs in registration, a first of its kind. Otto Kassino’s primary offering is founded on speed and simplicity. Winnings are always real cash that a customer can receive in their bank account within minutes.
THE MARKET
The global online gambling market is set to rise by 11.5% a year over the 2020 - 2027 period and reach $ 127B by 2027. Increasing smartphone penetration, growing customer appetite, easing regulations and technical advances (5G, live streaming) are driving the market.
According to Research And Markets, the global online gambling market is expected to reach $ 127B by 2027
Generating a CAGR of 11.5% over the 2020 - 2027 period
Driven by the increasing adoption of smartphones and technical advances (5G, live streaming) that enable a better online experience
“Moreover, increasing digitalization coupled with secure digital payment options are also some factors contributing to online gambling market growth.” Research And Markets
According to Global Market Insights, the online gambling market is set to reach $ 160B by 2026, up from $ 55B in 2019 for a CAGR of 16.5%
Driven by technological advancements such as machine learning and easing regulation
According to BCC Research, the global market for online fantasy sports should grow from $ 20.4B in 2020 to $ 86.3B by 2025, representing a CAGR of 33.4%
Driven technological advances such as 5G are expected to enhance user experience with faster loading speed and improved real-time playing experiences
More favourable legislations combined with rising internet penetration and growing mobile app demand are also expected to drive demand for fantasy sports on mobile
“Asian economies, such as India, also witnessed a rapid increase in fantasy gaming app users. Many companies have launched mobile apps to attract and engage users in fantasy gaming platforms.” Sarah Greenberg for BCC Research
According to Research And Markets, the global mobile gaming market is set to grow by 14% a year over the 2020 - 2025 period
Driven by growing smartphone penetration, decline in costs in internet data packs and innovations such as cloud gaming and augmented reality
According to Statista, mobile games in the USA reached $ 18.3B in 2020 - up 19.5% year on year
Revenue is expected to show an annual growth rate of 10% over the 2020 - 2025 period and reach $ 29.6B
Driven by growing user penetration from 46% in 2020 to 53% in 2025
TIER-1 MANAGEMENT
Henrik Tjarnastrom is the Chief Executive Officer of the Kindred Group and previously was the Chief Financial Officer. He has been with the company since 2008. Nils Andén is the Chief Financial Officer and previously served as Chief Marketing Officer.
Current Chief Executive Officer at Kindred Group Plc
Joined the Board of Directors in 2003 and was part of the Board until he stepped into the role as Chief Financial Officer in 2008. Before joining the Kindred Group, he was employed as Senior Financial Manager at Skanska Infrastructure Development AB from 2001 to 2008
Holds an MSc in Industrial Engineering and Management from the Institute of Technology, Linköping University, Sweden
Current Chief Commercial Officer and was appointed for this position in July 2020
Has previously worked for Kindred, first as a management trainee as far back as 2006, the Head of Poker and Head of Established Markets. Has also served as the Chief Marketing Officer at Kindred’s Unibet brand. Has served on the Advisory Board of Kaplan AB before its acquisition by Accenture Digital. Currently sits on the Board of EasyPark Group, the leading mobile parking company in Europe
Studied marketing at Stockholm School of Economics and Sociology at Stockholm University
Current Chief Marketing Officer at Kindred Group PLC
Has worked in the online gambling industry for over 14 years and joined Kindred in 2010. Has held previous positions at Kindred, such as leading the company’s Central Brand Marketing function
Holds a degree in Marketing and Advertising from the International Academy of Business and Management in Moscow
After founding the Kindred Group PLC and growing it into what it is today, Anders Ström opted to step down as the company’s non-executive chairman. In an interview with SBC News, he noted:
“Kindred has undertaken a fantastic journey during the 23 years that have passed since I founded its most well-known brand, Unibet, and has developed into a great company with almost 30 million customers, 1,600 employees, and with excellent further opportunities of growth with the right strategies and focus. Hence, I look forward to taking part in such a growth in value as an owner and investor.”
RED FLAGS
Back in 2007, a warrant was issued to the then Unibet CEO, Petter Nylander. He would then get detained by Dutch authorities while checking in to a flight to head back to the UK. The warrant was based on the French monopoly protection legislation of 1836 and the background for the detention was the proceedings filed in 2006 by the French monopoly PMU against Unibet.
In an official statement by Unibet, the company cited France’s disregard of European Community law, aiming to protect a domestic, commercial gambling monopoly
FINANCIAL REVIEW
Gross winnings revenue amounted to £ 364.7m (236.2m), an increase of 54% for the fourth quarter of 2020
Gross winnings revenue amounted to £ 1,130.2m (912.8m), an increase of 24% for the full year 2020
Underlying EBITDA was £ 118.0m (30.7m) for the fourth quarter of 2020
Underlying EBITDA was £ 286.8m (130.0m) for the full year 2020
Profit after tax amounted to £ 84.9m (10.9m) for the fourth quarter of 2020
Profit after tax amounted to £ 165.2m (56.6m) for the full year 2020
Earnings per share were £ 0.374m (0.048) for the fourth quarter of 2020
Earnings per share were £ 0.728m (0.250) for the full year 2020
Free cash flow amounted to £ 111.2m (18.3m) for the fourth quarter of 2020
Free cash flow amounted to £ 267.5m (48.5m) for the full year 2020
Achieved a net cash position of £ 104.7m (net debt position of £ 155.0m)
THE TAKE
What we like:
Kindred is a leading gambling company with over 30m customers, a global footprint and a dynamic portfolio of brands
The company is known for leveraging consumer insights and technology to continuously re-invent itself and stay at the forefront of gambling trends and markets
The gambling market is set to triple by 2026, helped by easing regulation and growing customer demand
The group is fairly valued compared to its peers while growing by more than 50% year-on-year
What we don’t like:
Kindred’s growth-by-acquisition strategy may be pressured by anti-trust concerns
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Disclaimer: Return is not an investment advisor, we have no access to non-public information about publicly traded companies, and this is not a place for the giving or receiving of financial advice, advice concerning investment decisions or tax or legal advice. We are not regulated by the Financial Services Authority. Investors should conduct their own analysis before making any investment. The value of shares, assets and investments and the income derived from them can decrease as well as increase. Investors may not get back the amount they invested - there is a real risk of partial or total loss. Past performance is not a guide to future performance.
Disclosures: The author has a position in Kindred Group Plc. The author has no business relationship with any company mentioned in this article and the author is not receiving any form of compensation for this article.
Picture: Courtesy of Kindred Group Plc.