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Copyright 2004 Financial Times Business
Limited
Investors Chronicle
November 5, 2004
SECTION: ISSN. 0261-3115
LENGTH: 373 words
HEADLINE: SPORTINGBET (SBT)
BODY:
The tabloids may these days be filled with
horror stories about compulsive gamblers in a backlash against
the government's new gaming bill but, if Sportingbet's results
are anything to go by, the warnings are falling on deaf ears.
The online gaming outfit saw underlying operating
profits rise from £14.6m to £21.7m last year and grew
its European customer base by 70 per cent. What's more, its £162m
acquisition of the world's third-largest online
poker site, Paradise Poker, announced alongside these results,
is expected to significantly enhance earnings. Numis Securities
has upgraded 2005 pre-tax profit forecasts from £23.1m to
£44.5m (EPS of 10.8p), and is pencilling in profits of £61.6m
(EPS of 13.8p) for 2006.
Online
poker is a fast-growing market with fat profit margins. Around
50m people in the US play the card game, but only 2 per cent play
online. The game is growing in popularity, though, due to high-profile
celebrity poker tournaments, including one televised on CBS featuring
actors Ben Affleck and Nicole Kidman.
Paradise not only appears to be an attractive
purchase, but opportunities for cross-selling between the two
sites also look promising. The combined customer base is 2m, with
only a 14,000 customer overlap, and analysts say that half of
poker players are
likely to bet on sports, too. The company plans to
begin paying a dividend in 2005.
Ord price: 131p Market value:
£278m
Touch: 130-132p 12-month High:
140p Low: 27p
Dividend yield: PE ratio: 50
nil
Net asset value: Net funds: £2.6m
48p* *Includes
intangibles of
£124.2m, or 58p a
share
Year to Turnover Pre-tax Earnings Dividend
31 Mar ( £m) profit (£m) per share (p) per share (p)
2001 325 -4.2 -3.65 nil
2002 992 5.0 3.38 nil
2003** 969 1.4 0.78 nil
16 months to 31 16 months to 31
Jul Jul
2004 1432 5.4 2.60 nil
% change.. % change.. +189 +150 - Last IC view:
7 May 2004,
page 45
**Restated
..Annualised
The bookie never loses, although legislative
changes in the UK and Europe could throw some uncertainty into
the game. Trading on 12 times current-year earnings forecasts,
the shares are worth a punt. Buy.
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