Some City analysts believe shares in gambling operator 32Red (TTR) will bounce back later this year - a theory that hinges on the success of a legal challenge mounted by the Gibraltar Association against the Point of C onsumption (PoC) tax due to be introduced in December. Whether or not the gambling lobbyists are successful, 32Red is for now growing at an impressive clip.
In the six months to 30 June, a 19 per cent increase in gross gaming revenue resulted in a 22 per cent improvement in cash profit to £2.3m. That was partly flattered by a lower investment in the new Italian unit than last year, but cash profit was up 9 per cent to £2.7m even before the start-up costs.
The Italian business is off to a good start, too. Gross gaming revenue rose 130 per cent to just over £1m, with more than 3,000 new players recruited in the first half. But marketing in Italy will now take a backseat as the company spends more on UK advertising to offset the new 15 per cent PoC tax - assuming it is introduced. For now, 32Red is focused on developing the new sportsbook product that was launched in June to coincide with the World Cup.
Broker Numis Securities expects pre-tax profit of £5.7m this year, giving EPS of 7.3p, up from £4.8m and 6.1p, respectively.
| 32RED (TTR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 58p | MARKET VALUE: | £43m | |
| TOUCH: | 55-57p | 12-MONTH HIGH: | 89p | LOW: 46p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 6p* | NET CASH: | £4.9m | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 19.0 | 1.3 | 1.8 | 0.8 |
| 2014 | 22.6 | 1.2 | 1.6 | 1 |
| % change | +19 | -8 | -8 | +25 |
Ex-div: 1 Oct Payment: 31 Oct *Includes intangible assets of £2.1m, or 2.9p a share | ||||
