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William Hill realises its American dream

The bookie saw growth in the US during the first half
August 9, 2019

William Hill’s (WMH) half-year report celebrated expansion in the land of the free - freer regulation, that is. The gambling company took over $1bn of bets in the US over the first half of 2019 and, with the help of its casino partner El Dorado, reached 27 per cent market share. Since a sports betting ban was overturned in 2018, William Hill has expanded into eight states, with two more going live imminently. Chief executive Philip Bowcock expects access to an additional 34 casinos via El Dorado’s acquisition of Caesar’s. This, alongside an innovative proprietary technology platform that adapts state by state, positions the company well for growth. 

IC TIP: Buy at 157.2p

Promising US performance balances out William Hill’s £63.5m UK loss, attributed to the recent £2 stake limit imposed on fixed-odds betting terminals (FOBTs). Despite consumer behavioural change - a mixture of lower-stake FOBT use and increased betting on horses and greyhounds - it was “clearly not enough to offset the impact of” regulatory changes. A resultant 700 stores are expected to close by the end of 2019, with lease negotiations estimated to draw a £40m-£60m cash cost.  

Tougher UK restrictions also pushed the company towards Europe. Its acquisition of Mr Green in January enabled a shift of international business into Malta and cushioned the blow of a Swedish gambling crackdown. A third of digital revenues now come from outside the UK - a figure Mr Bowcock hopes to raise to 50 per cent by 2023. 

Analysts at Peel Hunt expect adjusted pre-tax profits of £81.4m in 2019 giving EPS of 8.2p, increasing to £125m and 12.5p in 2020.

WILLIAM HILL (WMH)   
ORD PRICE:157.2pMARKET VALUE:£1.37bn
TOUCH:157.1-157.4p12-MONTH HIGH:271pLOW: 128p
DIVIDEND YIELD:6.6%PE RATIO:54
NET ASSET VALUE: 35.4p*NET DEBT:176%
Half-year to 2 JulTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2018803-820-93.14.26
2019812-63.5-7.12.66
% change+1---38
Ex-div:24 Oct   
Payment:28 Nov   
*Includes intangible assets of £1.1bn, or 126p a share