Targeting poker users left out in the cold by the demise of US sites has paid off for online gaming company 888 Holdings after operating profits surged in the first half from $12.8m to $29m (£18m) on the back of a 72 per cent rise in poker revenues. That solid operational performance will need to be carried over into the second half as management expects that increased marketing spending in newly regulated markets such as Italy and Spain will hit profits.
Growth in poker boosted 888's consumer business and divisional revenues by 25 per cent to $164m, and the launch of a new gaming platform, Casino 50, at the beginning of the year has helped increase the number of games available and improve 888's ability to cross-sell. The company also made inroads into regulated markets after making a one-off payment of $11.1m to Spanish regulators; 888 received a gaming licence earlier this summer and is now the second-largest poker site in Spain. Italy is also a new frontier and management plans to increase marketing spend and introduce slot machine games into the market there this year. Meanwhile, consolidation in the business-to-business (B2B) segment meant revenues there were slightly down at $22.8m as the company shed unprofitable licences.
Investec upgraded its 2012 EPS forecast by 52 per cent to 10.2¢, rising to 11.7¢ in 2013.
888 (888) | ||||
|---|---|---|---|---|
| ORD PRICE: | 86p | MARKET VALUE: | £300m | |
| TOUCH: | 85-87p | 12-MONTH HIGH: | 86p | LOW: 28p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 39¢* | NET CASH: | $23m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 153 | -22.1 | -6.70 | nil |
| 2012 | 186 | 18.3 | 4.50 | 2.50 |
| % change | +22 | - | - | - |
Ex-div: 12 Sep Payment: 18 Oct *Includes intangible assets of $145m, or 41¢ a share £1=$1.57 | ||||
