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Australia – Tabcorp shares plummet 81 per cent as demerged Lottery Corp. floats to success

By - 25 May 2022

Australian betting operator Tabcorp saw its shares slump by 81 per cent to AU$1.01, following the demerger of its lotteries business, Lottery Corp, which became an AU$10bn as it floated on the Australian Stock Exchange. 

Motley Fool Analyst James Mickleboro said: “Based on the current Lottery Corporation share price, it has a market capitalisation of approximately $10.24bn, whereas new Tabcorp is valued at $2.2bn. Whether you can call Tabcorp a gaming giant anymore remains to be seen. Its shares are down a massive 81 per cent to 99 cents at the time of writing, with the balance of power seemingly shifting to the ASX 200’s newest member.”

He added: “[Lottery Corp.] Management highlights that the Lottery Corporation is an omni-channel business with a portfolio of high profile, recognised brands and games, strong digital growth and a retail footprint across ~7,000 retail outlets/venues. This makes it one of the largest in the country. These businesses continued their solid growth in FY 2021, generating a 14.4 per cent increase in EBITDA. This meant that its Lotteries and Keno businesses contributed 55 per cent or $611m of Tabcorp’s total EBITDA during the 12 months.

“Pleasingly, since then, these businesses have continued their positive form. For example, in February, Tabcorp reported a 15.1 per cent increase in Lotteries and Keno EBITDA to $358m. Whereas the rest of the business reported earnings declines, which led to group EBITDA falling 5.5 per cent over the prior corresponding period to $529m.”

Sue van der Merwe, Chief Executive and Managing Director of Lottery Corp. highlighted the opportunity to expand abroad. Speaking to the Australian media, she said: ““If you look back in history, we’ve got this proven ability to drive sustainable revenue growth, and we’ve seen that through downturns – through the GFC, for example, and other challenging economic cycles, through COVID. We’ve actually seen an acceleration of interest in our offering products.” 

Lottery Corp. generated EBIDTA of AU$611m from revenue of AU$3.2bn for the year to June 30, 2021.

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