"While the Flexi-NET acquisition is the key driver of earnings growth in FY15, eBet has a number of longer dated growth options into FY17.
Firstly, eBet’s business has primarily focused on NSW. In this region, EBT’s footprint encapsulates 590 venues with over 40,000 electronic gaming machines (EGMs).
Until recently, eBet’s gaming systems business had no exposure to the Victoria gaming market. However, in August 2014, EBT received approval for its metropolis gaming system from the Victorian Commission of Gaming and Liquor regulation. Since this time eBet has entered agreements encapsulating 98 venues and nearly 5,000 EGMs.
Furthermore, it is encouraging to see a continuation of the improvement of recurring revenue streams. eBet’s share price should be rewarded as this revenue composition trend continues to unfold.
With eBet likely to deliver above market EPS growth in the coming years while offering an undemanding valuation and the potential for future capital management, we retain a “buy” recommendation with a price target of $4.60."
ITQ Price at posting:
$4.00 Sentiment: Hold Disclosure: Held
