COVID-19 Restrictions, Higher Direct Costs, Lottery Liabilities and Competition Weighs on SVL’s Bottom-line

• For its first quarter ending March 2021, Supreme Ventures Limited earned $592.26Mn (EPS: $0.22) in net profit attributable to shareholders, which translates to a 19.8% (or $146.11Mn) contraction when compared to the comparative period last year.
• Although total gaming income rose 5.7% (or $580.54Mn) due to a significant rise in sports betting, this was outweighed by the 11% (or $859.58Mn) increase in direct costs owing to efforts to expand the business in preparation for the economic recovery.
• Management also attributed the outturn to several external factors including government-imposed restrictions to contain the spread of COVID-19, higher lottery liabilities during the quarter when compared to Q1 2020, and the introduction of competition. 
• Nevertheless, the company states that it will continue to roll out its channel diversification strategy, giving its customers the option to game at their fingertips in the next few months. This growth in its mobile channels across all gaming segments through the increased acquisition of customers will be key to the company’s ability to continue growing revenue. It also aims to grow revenues through its new loan product, Evolve, which will strengthen its relationship with retailers and allow them access to low-cost funding to grow their businesses.
• Supreme Ventures stock price has depreciated by 9.1% since the start of the year and currently trades at a P/E of 18.9x earnings, which is below the Main Market average of 31.8x earnings.

(Source: SVL’s Financials)