GVC is gambling on Brazil success
WHO do you fancy to win the World Cup final in Rio de Janeiro on July 13th?. Home country Brazil are obvious favourites at 13/4, Argentina and Lionel Messi are 5-1 shots, while Germany come in at 6-1 and Spain 7-1. No hopers England are priced at a generous 33-1. Millions will be wagered on the world football extravaganza and it’s a good bet GVC Holdings, Latin America’s largest online bookmaker, will see a lot of the business.
Shares of the Isle of Man-based company galloped 18.5p or 5pc ahead to 398.5p after reports operating profits had more than doubled to €38.3m in 2013, boosted by the acquisition last year of Sportingbet.
GVC was the junior partner to William Hill in a £485m takeover of the online gambling group in March, acquiring Sportingbet’s operations in 24 countries for around £31m, while Wm Hill took on the businesses of the better regulated Australia and Spain markets.
Major shareholders led by entrepreneur Richard Griffiths, who owns 14.9pc, are rewarded with a 120pc dividend increase to 48.5 cents. He has been a long-term supporter of the management and first bought stock at 70p some six years ago.
Chief executive Kenneth Alexander said: ‘We are now ready for the next stage in our corporate development and further geographic expansion through organic growth and acquisitions.’
Yet he warned ‘any deal would not be at the expense of a policy of paying out around 75pc of operating cash flow in dividends’.
Broker Daniel Stewart has a target price of 476p and says GVC occupies top position in market share terms in Brazil. This not only bodes well for the future of the business in Brazil but also provides a significant opportunity for GVC to further grow the brand and penetrate other Latin American markets.
Online gambling company Bwin.party cheapened 1.1p to 123.9p with dealers underwhelmed by first- quarter results and the appointment of former 3i boss Philip Yea as chairman. He quit 3i in January 2009 with a £773,000 pay-off for loss of office after a disastrous year in which shares of Britain’s oldest private equity group lost 75pc of their value.
Numis is bullish though. Analyst Ivor Jones reckons that with an activist shareholder Owl Spring and a new chairman on board, Bwin.party has external and internal agents for change. His target price is £2.
Following Wall Street and Nasdaq’s rally late on Tuesday, the Footsie closed 44.92 points higher at 6,635.61. Wall Street closed 181.04 points ahead at 16,437.18 with dealers on both sides of the Pond relieved that Alcoa had kicked off the first-quarter US reporting season with better-than-expected figures. It reported earnings per share of $0.09 against expectations of $0.05.
Broker Deutsche Bank had buyers piling back into housebuilders after saying recent falls on fears that UK interest rates could rise sooner than expected have been overdone. There is still significant upside potential to forecasts from house price inflation and mid-high single digit dividend yield. Current levels present an interesting bguying opportunity.
Barratt Developments, one of its top picks, rallied 14.7p to 395.9p.
International bank Standard Chartered rose 36.5p to 1,327p after Investec’s banking guru Ian Gordon advised clients to buy. He says it has the strongest outlook for Return on Equity of any UK bank in 2014 and adds that even in the ‘annus horribilis’ of 2013, the normalised ROE was 11.2pc.
Warning lights flashed for motor insurers after the market heard that insurance premiums fell further in the first quarter of 2014, confounding hopes of a bounce back. Prices dropped by 7.5pc in the last three months after having shown signs of bottoming out, according to price comparison site Confused. com and professional services company Towers Watson. eSure reversed 23.7p to 244p and Direct Line 5.4p to 233.4p.
Electrical equipment company Volex blew a fuse at 96.5p, down 11.75p, following a disappointing year-end trading update. Broker N+1 Singer said the group’s global keener pricing strategy has led to reduced gross margins and an impact on operating profit.
Chimichanga-to-Tex-Mex restaurant group Prezzo improved 1.5p to 152.5p after raising full-year profits 11pc to £20.4m. Prezzo plans to add up to 30 new restaurants to its estate this year and has opened one new site in Ripon so far.
Sports nutrition products company Science in Sport rose 3.75p to 49.25p on a positive trading update. Sales for the year to end March will be 24pc ahead year on year at a better-than- expected £6.84m. The board placed 5.1m shares at 45p a pop with institutions and directors in order to create more working capital.
REITERATING their sell recommendation on Wm Morrison, 1.1p off at 201.9p, following a meeting with management in Leeds, analysts at Shore Capital said the company is now applying a more appropriate trading strategy, but is doing so from a position of weakness and is helping to create near industry chaos. The majors are in the midst of a perfect storm compressing profitability, driving downgrades and de-rating the sector.