Light & Wonder (LNW), mcap=$5300m

LWN pitch:
– Gaming content creator/manufacturer/distributor for land-based and digital casinos.
– Oligopoly with 75% recurring revenue and high switching costs.
– Has now assembled an all-star team after hiring around 50 high-level executives from rival Aristrocrat.
– Core business is expected to benefit from an increase in casino CAPEX following two years of negligible spending.
– Also, market is currently ascribing nearly 0 value to LNW’s two digital assets – digital casino games and mobile/social gaming.
– Digital assets are highly synergistic to its main business and are expected to benefit from digital casino legalization in the US and growing TAM for mobile/social gaming.

LNW valuation:
– LNW trades 6.5x 2024 EBITDA vs 10x for closest peer Aristocrat.
– Optionality to re-rate closer to video game focused peers (trade at 17-19x EBITDA).
– Stock is expected to return 3.7x MOIC.

Exp. gain: +270%

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