Stride Gaming’s (STR) management is hoping for a decent premium on the £4.3m net asset value of InfiApps, its social gaming company, which is up for sale. Still, it’s likely to lose money on the $39.2m (£29m) investment it made in 2015 soon after joining Aim, but chief executive Eitan Boyd has asked us not to “rub salt on the wound”. To mitigate this error, he is looking to expand the group via organic and acquisitive growth, but concedes that it’s best to “stick to what you know”.
Unfortunately, sticking to what Stride Gaming knows means exposure to the UK online gambling market, which is facing rising regulatory scrutiny. In the February half-year, adjusted cash profits dropped 1 per cent due to a 4 per cent increase in the group’s point-of-consumption tax rate. Like many of its peers, Stride has been caught by the new charges on bonus money brought in last August.
Management thinks new games will help mitigate the impact of the taxes, as the group can expand margins by cross-selling products and increasing the yield per customer, while overseas expansion will help lower the exposure to the UK. But analysts at Edison still expect a sharp fall in adjusted pre-tax profits and EPS in the year to August 2018 – to £14.2m and 14.3p, respectively (18.9p and 25.8p in FY2017).
| STRIDE GAMING (STR) | ||||
| ORD PRICE: | 182p | MARKET VALUE: | £138m | |
| TOUCH: | 180-183p | 12-MONTH HIGH / LOW: | 267p | 182p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | NA | |
| NET ASSET VALUE: | 82p* | NET CASH: | £22.4m | |
| Half-year to 28 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 39.3 | -0.9 | -15.3 | 1.2 |
| 2018 | 44.9 | 3.9 | 2.1 | 1.3 |
| % change | +14 | - | - | +8 |
| Ex-div: | 05 Jul | |||
| Payment: | 01 Aug | |||
| *Includes intangible assets of £48.8m, or 64p a share | ||||
