Cheaper GVC shares are a strong bet for investors
GAMBLING firm GVC was a strong bet for traders yesterday as analysts at Investec said a sell-off of its shares had been considerably overdone.
The whole betting sector has been weighed down by Government plans to cut the maximum stake customers can place on highly- addictive self- service machines in High Street bookies.
Many betting firms were worried this would cut revenues and force them to close shops, especially after political pressure forced the Government to impose the changes earlier than expected.
The £ 2 limit on bets made through the machines will now come into force in April, along with an increase in taxes for online casinos from 15pc to 21pc.
Investec’s Alistair Ross warned the changes will hit GVC earnings, and pushed down his profit forecasts for 2019 by 20pc to £630m. But the Ladbrokes Coral owner is still his top pick in the sector.
Ross said there could be a boost from its expansion into the US now that sports betting has been legalised there.
Analysts at Citi argued the early enactment of the new gaming machine rules is actually a ‘significant positive’ for GVC.
When the firm bought Ladbrokes Coral in March this year, it promised Ladbrokes Coral’s shareholders that it would pay them £676m if the new rules hadn’t been enacted a year later.
Now, it should be able to dodge this vast sum. Shares climbed 9.1pc, or 60p, to 721.5p.
The positivity rubbed off on internet bingo firm 888 Holdings, which edged up 3.1pc, or 5p, to 165p, and Paddy Power Betfair which jumped 2.8pc, or 180p, to 6605p. The rise wasn’t enough to bring the FTSE 100 into the black, as it posted a 0.5pc, or 32.33-point, decline to end at 6845.17 points.
Poor economic data from China worried investors in steel company Evraz (down 3.9pc, or 18.9p, to 464.4p) and copper miner
Antofagasta (down 2.1pc, or 16.6p, to 778p), since the country imports so much metal.
Housebuilders were also stuck in a dip as they extended their rollercoaster ride, amid growing fears about the Brexit deal.
Investors are worried a hard Brexit could knock the UK economy and make people less keen to buy houses. Barratt Developments was down 2.7pc, or 12.2p, at 440.5p, Persimmon slid 2.7pc, or 52.5p, to 1897p and Taylor Wimpey fell 2.1pc, or 2.9p, to 132.3p. Smaller rival McCarthy & Stone revealed that its top brass had missed out on grabbing 283,332 shares through reward schemes since 2015, due to falling short of performance targets.
At last night’s value, the shares would have been worth £383,065, and around half would have been awarded to chief executive John Tonkiss. Shares yesterday dipped 2.7pc, or 3.8p, to 135.2p.
Daily Mirror owner Reach gave investors something to smile about as it said annual profits will top expectations.
The firm, previously known as Trinity Mirror, expects to beat a forecast of £132m to £134m as its merger with the Daily Express progresses quickly. Revenue grew by 23pc in the final quarter, and the company is aiming to save £ 20m a year by 2020. Shares jumped 10.5pc, or 6p, to 63p. Litigation funder Manolete Partners, which helps pay for the costs of companies’ legal cases in return for a cut of any proceeds they win, began trading on the London Stock Exchange.
The shares climbed 10.9pc, or 19p, to 194p on the first day of trading. Manolete has funded several prominent cases, including a claim against TV presenter Anthea Turner over the collapse of her ex-husband’s business.