JPJ Group plc - RGD increase marginally higher than expected

The UK government has raised remote gaming duty (RGD) from 15% to 21%. This is 1% higher than expected by the market and we now include a c £12m annual impact on group EBITDA into our forecasts for JPJ. While regulatory pressures are likely to remain a feature of the UK gaming sector, JPJ should benefit from its market leading position and we anticipate annual operating cash flow of over £90m. The stock has fallen c 40% since June and now trades at 7.9x EV/EBITDA, 5.6x P/E and 15.5% free cash flow yield for FY19e.