The online gaming market is in a frenzied growth phase at the moment as countries in the EU gradually grant licences to gaming companies and tablet computers and smartphones make online gambling easier than ever. Gibraltar-based online casino operator 32Red (TTR) has clearly benefited from this trend as a near doubling in casino revenues to £28.7m in the past two years testifies.
However, there are a few unresolved issues, particularly the prospect of a point-of-consumption gaming tax in the UK, which chief executive Ed Ware said "risks making a Horlicks of the UK regulated gaming market". He added that the Gibraltar-based gaming companies would look at judicial review and legal challenges if the tax were enacted.
The increased emphasis on marketing in the UK - 32Red spent over £6m last year - added nearly 42,000 new casino players to the company's books during the period, with the number of active players increasing to 57,338, compared with 39,687 a year ago. The high influx reduced the average yield per player from £550 to £500, but the cost of acquiring new punters was relatively stable at £147. The company has also started trading slot machine games in Italy after gaining a licence late last year. The Italian operation posted a loss of £0.3m, but is now ramping up its marketing campaign with TV adverts.
Broker Numis forecasts current year pre-tax profits of £3.8m and EPS of 5p (from £3.2m and 4.1p in 2012).
32RED (TTR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 56.25p | MARKET VALUE: | £39.7m | |
| TOUCH: | 55.5-57p | 12-MONTH HIGH: | 56.25p | LOW: 34p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 6p* | NET CASH: | £4.4m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 12.9 | 1.26 | 1.83 | nil |
| 2009 | 12.7 | 0.53 | 0.76 | nil |
| 2010 | 16.9 | 1.05 | 1.50 | 0.50 |
| 2011 | 25.0 | 2.16 | 2.94 | 1.20 |
| 2012 | 32.1 | 2.04 | 2.81 | 1.40 |
| % change | +28 | -6 | -4 | +17 |
Ex-div: 3 Apr Payment: 3 May *Includes intangible assets of £1.16m, or 1p a share | ||||
