Strong Digital Growth Not the Right Medicine for Tabcorp's Retail Venue Headaches

We maintain our AUD 3.40 fair value estimate for shares in no-moat Tabcorp following release of interim fiscal 2021 results. Underlying NPAT slipped 3% compared with the previous corresponding period, or pcp, to AUD 207 million. Retail closures weighed heavily on the gaming services and physical wagering businesses, only partly offset by strong digital growth in wagering and continued lottery performance. We lift our fiscal 2021 NPAT forecast by 2% to AUD 336 million, principally due to improved lotteries outlook. But our long-term forecasts remain broadly intact and we forecast an EPS CAGR of 14% over the five years to fiscal 2025.