Tag: TAH

Tabcorp has sold its 11.6% interest in Jumbo Interactive ((JIN)) for $13.52 a share or $98m. A one-off net profit on the sale of $69m will be recorded in the first half and proceeds will be used to pay down debt.

Tabcorp is facing a challenging year, cycling a fortunate run of lottery jackpots amid wagering retail venue closures and an uncertain outlook for sports betting.

Credit Suisse downgrades to Neutral from Outperform. The share price has rallied 45% since the trough and is now approaching the broker’s target. Target is $3.20.

Tabcorp’s gambling offerings are materially impacted by pub/club closures, the broker notes. Lottery ticket impact at newsagents is unclear in the lockdown. Can racing (80% of wagering) continue with everything else suspended? How much offset can be gleaned from increased online activity?

Credit Suisse suspects the company may need equity of $500m, although it acknowledges it does not have a liquidity issue.

Tabcorp’s result missed the broker at the headline but the detail within the numbers was positive.

GVC Holdings will acquire Neds International. Deutsche Bank observes the company’s rationale is scale and proprietary technology, as GVC has ambition to be the market leader.

The company’s shipping rate has fallen to 160-170mtpa after a record month of over 200mtpa in June. Macquarie reduces first quarter FY19 shipment forecasts by -11% after a soft July and August.

FY18 results were slightly below expectations. Deutsche Bank suggests Tabcorp is well-positioned to benefit from the integration of Tatts and an improving regulatory environment.

Victoria and Western Australia have increased race field fees from FY19. Even though the current Queensland regime expires June 30, 2019, Credit Suisse is not expecting any further moves, as the large Australian states now have closely aligned race field rates.

Victoria has announced that it will replace the existing state wagering tax with a point of consumption tax that catches all wagering operators in the country. This will come into effect of January 1, 2019. The point of consumption tax is set at 8%.

According to news reports, the federal government is about to legislate a ban on betting on so called ‘synthetic lotteries’ and keno products, in line with what has already been put in place in the Northern Territory.

Along with the scheme booklet, the company has provided an update on the proposed merger with Tatts ((TTS)). The parties are currently awaiting a Federal Court decision. The synergy target has been reiterated.

The broker suggests Tabcorp’s proposed acquisition of INTECQ would be a minor positive, enhancing the company’s offering a reach in table gaming solutions. The broker has increased earnings forecasts by 1-3% in anticipation.

The end of greyhound racing in NSW will be a minor negative for Tabcorp, the broker suggests, reflecting only 5% of total wagering revenue. On the assumption 50% of NSW greyhound wagering shifts to other states which have declared no ban intentions, the earnings impact would be around 3.5%, the broker calculates.

The Northern Territory government has surprised many by informing corporate bookmakers they must stop offering ‘click to call’ inplay betting product to their customers within the next 28 days.

The March Q was another strong one for Tabcorp in gaming and keno but wagering revenues were tepid. Digital wagering nevertheless grew 15% to offset declines in retail channels, the broker notes.

The agreement with Racing Victoria on a media rights deal for thoroughbred racing is considered a minor positive.

NSW race field fees have been increased to 2.5% of turnover from 2.0%. The increase comes as a surprise, the broker notes, given the NSW govt has just increased industry funding.

The broker views the decision of Racing Victoria to appoint Seven West Media ((SWM)) as its preferred broadcaster for thoroughbred racing as a minor negative for Tabcorp, although this does remain subject to approval from the four Victorian racing clubs.

The trading update revealed revenue growth of 3.3% in the March quarter, a reduction on the 6.7% witnessed in the first half.

Tabcorp’s revenues grew 6.6% year on year in the Sep Q driven by better wagering numbers. Wagering was driven by strong volumes in fixed odd betting at the expense of tote betting. The upcoming spring race carnival will be critical, the broker suggests.

CIMB has analysed betting data ahead of the Soccer World Cup. Despite the fact Australian operators have underperformed generating revenue from this event it remains a significant customer acquisition opportunity in the broker’s opinion.

The March quarter update showed an improvement on the first half and was broadly in line with the broker’s expectations. The main attraction for UBS is the potential upside from the Victorian gaming entitlement, although the outcome may not be forthcoming until FY15/16.

First half results have underscored the defensive nature of earnings in Citi’s opinion. The broker takes a conservative tack and this leaves room for stronger near-term revenue as well as margin opportunities over the longer term.