A block on digital gaming in one of its core markets has hit Playtech (PTEC) hard. Online gaming activity has been temporarily blocked in Malaysia - its second largest Asian market - since September. This outage has forced the gaming software specialist to issue a profit warning, announcing that full-year cash profits would be 5 per cent lower than the bottom end of market expectations.
Management had previously anticipated trading to normalise in the region within a relatively short timeframe, but these issues are now expected to spill over into 2018. Analysts at Canaccord Genuity estimate a four month block to online gaming could wipe €14m (£12.5m) off revenue for 2017.
Playtech has also had to content with a sluggish recovery in Sun Bingo after the site was relaunched. Losses could be as high as €25m on the individual contract by the full year, according to Canaccord Genuity. Analysts also reckon that Playtech has had to deal with several cost issues not mentioned in the trading update. Canaccord Genuity downgraded its estimates for cash profits by 8 per cent to €322m, bringing down EPS by 9 per cent to 74¢.
Elsewhere, the picture is not quite so bleak. Daily average revenues in the gaming division are higher than when the group's first-half results were released in August and financials division Tradetech is performing in line with expectations. The group is aiming to shift focus towards regulated markets. Management asserts that the pipeline for M&A activity is very strong and is in active discussions with a range of gaming businesses. Last month Playtech bought BetBuddy, the responsible gambling analytics solution provider, for an undisclosed amount.
