Tabcorp: Resignation of CEO Unrelated to Company Fundamentals

The abrupt resignation of Tabcorp CEO Adam Rytenskild has no impact on our outlook. The resignation, effective immediately, comes amid a probe into an allegation of inappropriate and offensive language used in the workplace. But we think the company’s fundamentals remain intact. The departure is due to personal behavior, rather than mismanagement. We make no changes to our AUD 1.05 per share fair value estimate. Shares screen as undervalued. We think the market is overly concerned about the abrupt departure, which is unrelated to business performance, and the near-term cyclical weakness facing the wagering industry.