The Lottery Corporation Limited (ASX: TLC) share price has commenced trade on the ASX boards on Tuesday.
In afternoon trade, the lotteries company’s shares are fetching $4.60.
The Lottery Corporation share price debut
The Lottery Corporation share price debuted on the ASX boards this morning following its successful demerger from gaming giant Tabcorp Holdings Limited (ASX: TAH).
Though, whether you can call Tabcorp a gaming giant anymore remains to be seen. Its shares are down a massive 81% to 99 cents at the time of writing, with the balance of power seemingly shifting to the ASX 200’s newest member.
Based on the current Lottery Corporation share price, it has a market capitalisation of approximately $10.24 billion, whereas new Tabcorp is valued at $2.2 billion.
What is The Lottery Corporation?
The Lottery Corporation is the new home of Tabcorp’s lotteries and Keno businesses.
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% increase in EBITDA. This meant that its Lotteries and Keno businesses contributed 55% or $611 million 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% increase in Lotteries and Keno EBITDA to $358 million. Whereas the rest of the business reported earnings declines, which led to group EBITDA falling 5.5% over the prior corresponding period to $529 million.
The good news is that management still sees plenty of growth ahead. It notes that the business offers infrastructure-like asset qualities, with low capital intensity and upside potential from digital growth.
It could also prove to be a good option for income investors. Management highlights that the company will aim to pay out 70% to 90% of net profit after tax excluding significant items.
The post The Lottery Corporation share price debuts on the ASX boards appeared first on The Motley Fool Australia.
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More reading
- ASX 200 midday update: Nufarm, Tabcorp and TechnologyOne tumble
- Why is the Tabcorp share price crashing 82%?
- 5 things to watch on the ASX 200 on Tuesday
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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