Shares in Gibraltar-based online casino operator 32Red have been traded on the Alternative Investment Market (Aim) for seven years, but the company has stayed largely under the City's radar as bigger operators grabbed the attention. That changed after 32Red successfully filed a claim against William Hill for copyright infringement, and its bosses, which are mostly former-Ladbrokes folk, made a conscious decision to raise its profile. The result has been a series of TV adverts and the fortuitous sponsorship of Swansea City football club, which has won many admirers for its attractive style of play. Taken together, that makes the company worth closer inspection.
Operationally, 32Red is a minnow compared with the gaming giants, but it has been acquiring active players at an increasing rate. More than 18,000 players joined in the first half, a 93 per cent increase on the same period last year, with total active players now over 31,000 (2011: 17,548). The advertising and marketing that drove that did not come cheap and cost of sales rose by £5.24m to £13m. However, the high number of sign-ups meant the cost of acquiring each new player fell from £173 to £166. The company also received an initial sum of £70,000 for costs associated with the successful appeal against William Hill and the level of damages relating to the case is now scheduled to be heard in early 2013.
Broker Numis forecasts pre-tax profits of £3.1m for 2012, giving EPS of 4p (2011: £2.6m and EPS 3.4p)
32RED (TTR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 43.5p | MARKET VALUE: | £31m | |
| TOUCH: | 43-44p | 12-MONTH HIGH: | 47p | LOW: 34p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 5p* | NET CASH: | £4m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 11.0 | 1.14 | 1.59 | 0.5 |
| 2012 | 16.5 | 1.16 | 1.60 | 0.6 |
| % change | +50 | +1 | +1 | +20 |
Ex-div: 12 Sep Payment: 5 Oct *Includes intangible assets of £1.3m, or 2p a share | ||||
