Gentoo Media: Operating conditions have stabilised - ABG

* Q3e: -22% y-o-y top-line decline* ABGSCe in line with low end of '25e guidance* Trading ~10% below peers at under 6x '25e EV/EBITDAQ3 expectationsWe expect Q3 sales of EUR 23.7m, down 22% y-o-y and down 3% sequentially. Moreover, we expect adj. EBITDA of EUR 10.9m, which corresponds to a margin of 45.8%. Various peer commentaries suggest that Brazil is growing, albeit at a somewhat more muted rate than was expected prior to peer Q3 reports. Notably, FTDs were up 12% y-o-y in Q2, suggesting that operating momentum was positive going into Q3. Even though the picture on the sportsbook margin is somewhat mixed when considering Betsson and Kambi's strong margins compared to the weak sports-win margin of Better Collective, we believe that this should carry a smaller impact for Gentoo vs. Better Collective.Minor estimate cutsPeer Q3 reports have been decent, and they indicate that Brazil is growing but at a somewhat more muted rate than previously expected. On the back of this, we only make minor estimate revisions, cutting '25e-'27e sales and adj. EBITDA by 1% and 3%, respectively. These estimate changes imply that we are in line with the lower end of the company's '25 guidance with respect to both sales and adj. EBITDA.Trading at a bit under 6x '25e EV/EBITDAGentoo is trading below 6x '25e EV/EBITDA, well below Better Collective (8.1x) but a bit above Gambling.com (4.3x). This means that Gentoo is trading 10% below the average of Better Collective and Gambling.com. Moreover, we highlight that Gentoo is trading at a '26e lease-adj. FCF yield excl. M&A of 25%.