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Bwin losing more chips

TIP UPDATE: Bwin's lives up to its accident-prone reputation by delivering another under-par operating performance

Bwin.Party Digital Entertainment (BPTY) failed to break its losing streak after a poor set of interim results sent investors hurrying for cover. The company faces complex problems in targeting higher-yielding punters in regulated markets, while at the same time dealing with a 5 per cent turnover tax regime in its home German market that has made short-odds betting on sports almost impossible. The net result was that top-line revenues for this year are now expected to fall between 14 per cent and 17 per cent, far more than forecast, with direct consequences for full year profitability given Bwin's natural operational gearing.

IC TIP: Sell at 114p

The cause of the fall in revenues was obvious from the slide in many of Bwin's key performance indicators. For example, the need to migrate customers over to a new IT system and to focus on higher-spending punters meant marketing was stopped in 18 countries. That led directly to a 25 per cent fall in active player days, as well as a 40 per cent reduction in new players signing up - though the absence of a major sporting event this year didn't help. On the plus side, the yield per player did improve by 0.6 percentage points to 9.6 per cent, which management hopes will be the basis of a future recovery.

Pending downgrades of more than 10 per cent, broker Investec was forecasting pre-tax profits of €119m (£102m) and EPS of 12.3¢ this year.

BWIN.PARTY DIGITAL ENTERTAINMENT (BPTY)

ORD PRICE:114pMARKET VALUE:£927m
TOUCH:113-114p12-MONTH HIGH:160pLOW: 91p
DIVIDEND YIELD:3.1%PE RATIO:na
NET ASSET VALUE:80¢*NET CASH:€75.1m

Half-year to 30 JunTurnover (€m)Pre-tax profit (€m)Earnings per share (¢)Dividend per share (p)
2012410-15.3-1.701.72
2013343-9.10-1.301.80
% change-16--+5

Ex-div: 11 Sep

Payment: 11 Oct

*Includes intangible assets of €646m, or 79¢ a share £1=€1.17