$FDJU: A French Monopoly with a 9.3% Yield and a Massive Valuation Gap 🎰🇫🇷
**The Company: A Legal Monopoly**
$FDJU (formerly La Française des Jeux) is the leader in the French gambling market. They hold a long-term legal monopoly on lottery games and offline sports betting in France. It is a high-margin, predictable cash-flow business. Recently, they expanded their footprint significantly by acquiring Kindred Group (Unibet), becoming a major player on the European scale.
**The Fundamentals:**
To understand why this is a mispriced bet, you have to look at the moat:
Dominant Market Share: FDJ is now the #2 gambling operator in Europe. The Kindred acquisition shifted their digital revenue from 12% to over 30%, transforming a "boomer" lottery into a high-tech gambling powerhouse.
Strong Margins: The group maintains a recurring EBITDA margin of over 24%, even with the integration of new assets. In their core French lottery business, that margin is closer to 35%.
The Monopoly Advantage: Unlike US betting apps (DraftKings, etc.) that spend billions on customer acquisition, FDJ owns the network. They have 30,000+ physical points of sale in France that act as a "free" funnel for their digital platforms.
Deleveraging Machine: Despite the €2.5B Kindred deal, FDJ is a cash-generating monster. They’ve already committed to reducing net financial debt significantly by the end of 2025/2026.
**The Opportunity**
The stock has been under pressure (~35% down over the last year) due to a "perfect storm" of news: the debt taken for the Kindred acquisition and a recent tax hike on gambling in France.
However, at the current price of ~€22.5, the market seems to be overlooking the resilience of the core business and the successful integration of Kindred.
**The 9.3% Dividend Floor**
The most compelling part of the thesis is the dividend.
Expected Dividend: ~€2.10 (2,05€ last year). Based on the group's 75% payout ratio policy.
Current Yield: ~9.33%.
History: The dividend has grown consistently every year since the IPO (from €0.45 in 2020 to €2.05 in 2025).
The CEO, Stephane Pallez, has explicitly reaffirmed the commitment to a high payout and a growing dividend. This creates a massive "valuation floor" — at this yield, the stock becomes a prime target for value investors and pension funds, making further downside limited.
**Market Sentiment and Liquidity**
Despite these fundamentals, the current market sentiment is quite bearish. The Short Interest has reached 5.89%.
What is notable here is the liquidity profile: because the French State and long-term partners hold a large portion of the shares (40% of total capital), the daily trading volume is relatively low (around 500k shares). With over 10.9 million shares currently sold short, there is a significant technical imbalance between the sell-side pressure and the available daily float.
**Upcoming Catalyst: February 19th**
The company will report its annual results on February 19th. This is a major event for the stock:
Dividend Confirmation: A formal announcement of the €2.1 dividend would solidify the 9.3% yield.
Deleveraging Update: Any positive news on debt reduction following the Kindred deal could trigger a re-rating of the stock.
**Conclusion**
I see $FDJU as a classic "mispriced" bet. You have a government-backed monopoly paying a (probably) safe 9% yield, while the market sentiment remains overly pessimistic. If the results on February 19th show that the business is as healthy as the dividend suggests, the current technical imbalance in the float could lead to a very sharp recovery.
Position: 717 shares @ 23.29€.
Disclaimer: This is my personal analysis and not financial advice. I am a shareholder of $FDJU.