Wednesday, August 31, 2011

Online gaming notes

FTAS 2800 +2.4%

BPTY 125.3p +13.9%
Online gaming company. Formerly PartyGaming plc. Brands include PartyPoker. Does bingo, too.

In half-year report issued today, pro forma total revenue down 3% due to competitive pressures in poker, the closure of French casino and the 2010 FIFA World Cup. Actual total revenue up 51% driven by merger. Current trading strong. The suspension of Full Tilt Poker's gaming license at the end of June removed a major competitor and consequently BPTY has seen an improvement in player numbers and average daily revenues.

Inititiation of share buy-back up to €75m

  • first impression is that they are disappointing with revenue down along with profit and liitle good news on regulatory front.
  •  very upbeat with statements like they will be back in the USA
  • Feel the SP is depressed due to fear on regulation and upbeat messages being ignored.
  • Great results and the divi is evidence of the progress.
 PER 6.6 ROE 4.6% (2010: 23.7%)

888 30.5p -1.6%
Provides online gaming entertainment, as well as B2B software, transaction processing, etc.

Half-year report issued today. Revenues up 18%, including poker revenues up 22%. EBITDA up 59% "This is a very strong set of results driven by good operating performances across our business lines. We have improved our offer, experienced good levels of new customer sign ups and activity has been at record levels." However, company made a loss in 2011. However, there were lots of impairment losses, amortisation, and acquisition expenses.

  • have no faith in this lot whatsoever now and without a sale, they are not going to survive in my opinion.
  • overpaid for Mytopia. Mytopia had given 888 "a foothold in a new segment" but that it had "unfortunately" failed to achieve predicted revenue targets and that the board had taken the “prudent” decision to write off the business’s value on the balance sheet as an “accounting operation”.

PER 11.51 ROE 13.12  Net cash 37m, mkt 105m.

PTEC 309p +3.9%
Half-year results were out  25 Aug. Gross income on a continuing basis up 19% and 8% on an aboslute basis. Total revune on a continuing baseis up 18% and 5% on an absolute basis. The Board has determined that due to exceptional joint venture and near term acquisition opportunities currently under discussion in certain key markets, it will defer a decision over the interim dividend until the final results for 2011, in order to retain maximum flexibility. Significant joint venture opportunities exist to create long term shareholder value in other regulated markets.

  • Playtech make money, and are going to make a lot more.
PER 8.9 ROE 28.9% Net cash 56m, mkt cap 752m.


Ross said...

You say of 888: "However, company made a loss in 2011". Do you mean 2010?

Mark Carter said...

Thanks for commenting Ross, I didn't know anybody read these posts. Actually, they're kind of lke little notes to myself.

In 6 m/e 30 Jun 2011, 888 made an operating loss of $17.0m, compares with a profit of $4.2m for 6 m/e 30 Jun 2010.

That's not as bad as it may appear, as operating profits before share benefit charges, restructuring costs and impairment charges what actually $9.8m for 6 m/e 2011, compared to $8.3m for 6 m/e 2011; an increase of 18%.

What turned the profit into a loss was a monster impairment charge of $20.2m. 888 acquired Mytopia games in Jun 2010, carried out a business review, and determined that it wasn't worth much. Oops.

888 also increaed its restructuring costs from $2.2m in 6 m/e 2010 to $4.9m in 2011.

I haven't actually been following the 888 story, I'm still trying to build up a picture in my own mind.

What's interesting though, is let's suppose we could "normalise" the EBIT to about £12m. Mkt cap is £106m, and it has net cash of £37m.

That would give it an UEY (unleveraged earning yield) of 17% (12/(105-37)). That's actually a pretty sweet deal, and I'm wondering if this whole restucturing and recent fiasco have presented a great buying opportunity. What I think is especially interesting is that although Sharelock shows an operating profit of £6m for the half-year, actual operatng cash-flow was £28.8m (half-year).

Shares shot up about 6% on the interims yesterday; but now I look at the situation, I'm wondering if the market has really missed a trick on this one.

Mark Carter said...

Post over on Motley Fool: