When the universe conspires to double you

Written by the Apostle Menthos

In these two groups, which I will mention below, the intense developmental environment that has created around their activity at the global level conspires to achieve economic and stock market growth that more than doubles in the medium and long term. I’m talking about the group of Intralot and Euroadvisors who, for their own reasons, have lined up on an upward trajectory that will take their shares above the €2 mark.

I’ll start with him Intralot Group In its latest financial statements for the first quarter of 2024, it confirmed in the best way that it is now on the right track to move into something much bigger. In fact, the data shows that at an annualized level (LTM), a turnover of €360 million and EBITDA profitability of €126 million, thus continuing a very positive rate of high EBITDA margin of more than +35%, constitutes the absolute percentage. Below future financial results.

So, from the following quarters onwards, the group only has up. Which is justified of course, as it expects increased performance from Croatia, Netherlands, Turkey and of course America, while at the same time Intralot is demanding contracts in North Dakota, Australia, Missouri, Quebec, Texas, Brazil and Brazil. Our OPAPs (VLTs). Contracts concluded in Missouri, Arizona and Maryland are also of great importance to the group.

But what signals the stock’s next big rally?

The first and most fundamental element is management’s assessment that it will, either alone or in a “strategic partnership” with an industry player, list Intralot on a U.S. stock market. The statement of Mr. Sokratis Kokkalis at the general meeting of shareholders that we seek to choose a solution that will give another “size” to the Intralot group reminds me of the opinion of a strong institutional player in the stock market where in the pantheon of a presentation he mentioned to me that before Intralot enters Wall Street, it will Wants to grow further either through a major acquisition or a “strategic partnership” with an industrial company already listed in it to effect an explosive reclassification through the existing “lateral”. In other words, it is not necessary to consider that the main goal of management is to enter the US subsidiary. Intralot Inc. alone, but ultimately the entire Intralot company.

Of course, this plan will bring great development because it will not only grow Intralot, but will literally put it in front of the eyes of big funds and gaming industry giants.

Let us not forget that in the field of gambling there is now an incredible cosmogony. Let us recall the recent super deal of €2.6 billion for the acquisition of the Swedish company Kindred by the French company La Francaise des Jeux. The acquisition, which, if we see that Kindred’s annual EBITDA during the first quarter of 2024 amounted to EUR 249 million, was made at a price representing a multiple of 10.5x. Intralot, with annual EBITDA of €126 million, has a current capitalization of €688 million, a comparable multiple of 5.5x.

As with simple calculations, Intralot is being “offered” for takeover at €1.33 billion or at €2.20 per share. Where is the stock price now? At a price of 1.14 euros. But be careful because this capitalization of €1.33 billion falls within the range of €1 to €1.5 billion mentioned by management at the general meeting.

The hidden but powerful sponsor of this target is the significant cash flows the group has and will demonstrate, thus lowering its net debt and net leverage ratio (net debt/EBITDA) further along the way. At the end of the first quarter of 2024, it was 2.6 times, and the Ambrosia Capital report expects that this year it will decrease to 2.3 times, and in 2025 it will decrease further to 1.8 times.

In the chart analysis, the resulting pressure on the semi-monthly price chart in the region of 1.10 euros gives respectively 1.40, 1.70 and then the final target 2.26 euros.

Move to Euroconsultants Technology Group (ESYMB)They came out the day before yesterday and announced a total backlog of projects exceeding 15 million euros. We are talking about an amount that is more than double the 2023 sales figure, and this is without taking into account the new projects that the group is demanding in 2024, which according to information exceed 15 to 20 million euros. It is very likely that Euroconsultants will find itself in the coming months with unimplemented projects worth more than €30 million.

As I mentioned in previous analyses, this group has huge potential to show in its financial results an EBITDA margin of 54% and a net profitability of +42% (!). Overall, the Group has the ability to turn EUR 30 million to EUR 16 million to EBITDA and EUR 12.6 million to net EBITDA excluding “restricted” estimated EBITDA as per management announcements from existing ongoing projects. Up to 2.5 million euros.

If we add to all this very positive scenario the fact that similar groups active in innovation, technology transfer and technological applications related to energy and climate change with very healthy or zero net debt, as is currently the case with Euroconsultants, have a capitalization of 3 to 4 times earnings Estimated EBITDA, we can easily see that the share price has all the foundations to exceed €2.20 with a current value of literally €20 million…laughs.

But wait because it does not end here because all of the above relates to the activity of Euroconsultants per se without including the three very important acquisitions that the group is preparing in three very hot sectors such as:

Firstly in the field of environmental, social and governance (ESG) standards, providing specialized services to adopt sustainable development best practices with the aim of creating long-term value, through compliance with environmental, social and governance (ESG) regulations and integrating sustainability and sustainability into business practices.

Secondly, in digital transformation, in developing modern information technology applications, as well as in providing comprehensive technical support and specialized consulting services to public bodies, online travel agencies and companies, while providing modern financial tools and

Third place in the field of innovation and clean green transformation, digital technologies using artificial intelligence and the Internet of Things, as well as energy management, energy conversion and energy infrastructure.

In fact, according to the management, it will soon be able to carry out the above-mentioned acquisitions, which means that the way the group is going until the end of 2024, it will grow so much that the €2.20 figure you mentioned as the share price will again be… small.

In analyzing the monthly chart, the stock looks like it has now started a long-term journey towards the €2 region with a short stop at €1.70 where a local bottom was made in August 2014.

Someone “stumbling” in and out of a stock below €1.50 might indeed be an interesting “sport”, but the way the group seems to be developing at some point will be fatal because when it escapes the subsequent upside margin will be very difficult. Faster and bigger.

* Apostolos Manthos is responsible for technical analysis and investment strategy.