OREANDA-NEWS. A weak Q416 left final results a tad below our forecasts despite good results in Mecca venues and Grosvenor digital. However, cash generation was strong and the dividend was lifted by 16%. The organic growth strategy (focusing on multi-channel development) remains intact and while the failure to progress what would have been a transformational acquisition of William Hill (with 888) was a disappointment, it demonstrates the scale of management's ambitions. We suspect that future accretive opportunities will arise within the consolidating online gambling space.

Rank's shares have fallen from a 2016 peak of 295.5p (on 8 January) weighed by concerns over UK consumer spending, disappointment over Mecca's digital migration issues and uncertainty around the William Hill situation. However, the rating now looks too low, with annualised 2016e EV/EBITDA only 6.9x versus 11.9x for the peer group, suggesting good upside potential. We are hopeful of a positive Q117 IMS in mid October, which would be a positive catalyst

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