Berenberg starts Acceler8 Ventures at 'buy'

(Sharecast News) - Berenberg initiated coverage of Acceler8 Ventures with a 'buy' rating and a 130p target price on Wednesday, arguing that the company's exposure to China's lottery market offers significant upside that was not reflected in the current valuation.

The broker said Acceler8, through its wholly owned Hui10 platform, was uniquely positioned to help digitise China's $92bn lottery industry and could benefit from a shift away from the country's paper-based lottery system. Berenberg estimates its valuation could rise to 275p if regulators approve paperless lottery play, which it believes could happen within the next six months.

The broker highlighted Hui10's growing rollout, with roughly 14,000 stores now connected to its Lucky World retail platform, up from 3,600 a year earlier, and a current run rate of around 1,500 new stores per month. Acceler8 was said to be targeting 70,000 connected outlets by the end of 2027.

Berenberg said Hui10's decade-long development work with state-owned enterprises and lottery operators has created substantial barriers to entry for potential competitors that might also be looking to capitalise on the digitisation of the lotteries in China as the firm secured a number of exclusive partnerships.

While monetisation remains at an early stage, the broker forecasts revenues of £635m and underlying earnings of £50m by 2028, rising materially if paperless play was approved. Berenberg also noted strategic backing from Entain and Allwyn, which own 8% and 2% of Acceler8, respectively.

Reporting by Iain Gilbert at Sharecast.com