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Real-Time news about Ladbrokes (London Stock Exchange): 0 recent articles
|bugle4: Citigroup upgraded Ladbrokes to 'neutral' from 'sell' and raised its price target to 110p from 100p, saying the shares have now fallen far enough.
It said the new target price represents the mid-point between the upside potential it sees under a deal scenario and the downside risk under a no-deal scenario.
Citi estimated the share price upside potential from a merger with Gala Coral at around 30% and the downside risk if no deal emerged also at around 30%.
"The competition authority investigation will rumble on for several more months, dampening any need to take a strong view in the shorter term," the analysts said.
Citi added that the two key catalysts that could drive a more positive view were trading updates citing an online pick-up, with a rise in active customers and net gaming revenues, and CMA deal clearance arriving earlier than the bank's mid-2016 expectation.
|scallywagkid: Canaccord 07 August...
Strategic downgrades, but raise to BUY
Ladbrokes is due to announce interim results on 11 August, but the key numbers were pre-released in July. Perhaps surprisingly, H1 profits were as expected, down 32%, reflecting the impact of Point of Consumption tax, increased Machines duty and a weak sports margin. LAD would have been on track for FY15 expectations however, new CEO Jim Mullen also unveiled his strategic review, which included the expected dividend cut from 8.9p to 3p, ramping up digital marketing spend and accelerating roll-out of Self-Service Betting Terminals and pace of store closures. It has raised £113m through a placing to rebuild the balance sheet and there were £5m-£7m of cost savings identified to be delivered from FY16. Most had been trailed in the press, but the net impact was at the higher end of expectations, given a £20m H2 hit from the investment programme.
Impact on the Canaccord Genuity view
The strategic pill was perhaps a touch more bitter than hoped (short-term), but sugared by a potential Coral merger reported in the press which we believe could drive material synergies. We downgrade our FY15 PBT (norm) from £67.5m/6.5p to £46.8m/4.4p, a 33% EPS downgrade, while FY16 falls from £76.5m/7.4p to £73.8m/6.5p (down 12%). The plan is designed to deliver higher Earnings from FY17 (with digital revenues up to 30% of group total) but this looks ambitious to us and our FY17 EPS are cut by 1%. Net debt comes down to £332m (or 2.2x Ebitda) and should fall below 2x in FY16. However, the real excitement is the potential Coral merger - unlikely to complete before mid-2016. At the current LAD share price, it would be paying just 8.3x FY16 Ebitda, ex-synergies, which looks attractive - in line with the LAD valuation, but with a higher proportion of Digital profits. The synergy target of £65m also looks unambitious - at just 4% of combined group costs. The challenge is calculating dis-synergies. With 3998 stores, or a 45% UK market share, we would assume LADCOR will almost certainly have to sell/close stores. If we assume these are averagely profitable LAD stores and sell for a 4x Ebitda multiple (some will just be shut), then a 500 store disposal would knock £34m off Ebitda, but only 20 basis points off the FY16 EV/Ebitda multiple.
Standalone Ladbrokes is not a steal, on FY16E PER of 16.9x and yielding 3.0%, but an 8.0x EV/Ebitda looks attractive. And LADCOR would look a lot more interesting. If we assume £220m of Coral Ebitda in FY16 (up from £200m in FY14), the full £65m synergy target (in reality this will be phased, but should be exceeded), and 500 store closures, we calculate the look through FY16 EV/Ebitda multiple would be just 7.2x. By comparison, William Hill is on 9.8x (albeit with a higher digital mix). We raise our TP from 115p to 123p, representing a 9.0x FY16E EV/Ebitda for solus Ladbrokes. With regulatory clearance of the Coral deal with "reasonable" conditions (i.e. c.500 stores), that would fall below 8.0x (assuming a full £65m of synergies), suggesting further upside to our target price. There is execution risk - both strategy delivery and merger - but this looks over-stated in the price. We raise our recommendation from Hold to BUY.
Share performance catalyst
Regulatory clearance/penalties for Coral deal, Digital recovery, machines regulation.|
|hllpri: Reading the data concerning the planned merger it is clear that Coral will be the senior partner in the combined entity. If it is a merger and not a takeover then there should be no substantial rise in the share price of Ladbrokes.
I am surprised that the management of Ladbrokes seemed to have accepted the terms of the merger without asking Corals to provide any incentive (e.g. a 20 pence per share sweetener to Ladbrokes shareholders for their agreement).
There has been a hint in other postings on this site that all might not be well with the finances of Ladbrokes which would indicate that this merger may be necessary from the perspective of Ladbrokes. At the present time there appears little appetite for other substantial players such as Paddy Power to get involved. Perhaps too the likes of Paddy Power believe it is not in their best interest to get involved because the Monopolies and Mergers Commission are likely to force Corals to sell shops where they and Ladbrokes are the only players in town This has the hallmark of being a Morrisons and Safeway revisited.
|hllpri: Ladbrokes increased significantly in price.
On Wednesday there was a surprising fall in the
share price. Today also there has been a fall in
the share price. The surprising thing though is that
on both days that the number of shares being bought
was greater than the quantity of shares sold.
In normal trading there would be a rise in the share
price and not a fall.
One possibility is that traders are trying to seek out
weak holders by placing doubts in their minds.|
|oneillshaun: Shares (Berlin: DI6.BE - news) in Ladbrokes (LSE: LAD.L - news) climbed after Morgan Stanley (Xetra: 885836 - news) upgraded the bookie following the relaunch of Ladbrokes.com and pointed to a couple of potential "hidden gems" in Europe.
Investors ramped up their bets on Ladbrokes , piling into the stock, after Morgan Stanley upgraded it to “overweight221;.
The bank lifted its price target from 135p to 150p, owing the move to the “digital turnaround”, following the relaunch of Ladbrokes.com. “We think there is now firm evidence that Ladbrokes Digital recovery is gathering momentum, with strong customer and staking growth in the past six months,” analysts said.
Over the past two years, the bookie has struggled, seeing its share price drop by 40pc. However, Morgan Stanley reckon the “worst may be past”, predicting annual revenue growth of between 15 and 30pc over the next two to three years.
However, whether the turnaround will work in the long-term, remains to be seen. In 2011, when Bwin merged with PartyGaming its revenues declined by 25pc for four years. In a highly competitive sector, the bookmaker’s European division may be offer “hidden gems”, according to Morgan Stanley’s note entitled “Odds Improving”.
Earlier this month, rumours surfaced that Ladbrokes Ireland had received three separate bids as part of its examinership process - which could ultimately lead to the sale of the division, thought to be worth between £30m and £60m.
The company’s most recent set of numbers were disappointing, with first-quarter earnings before interest and taxes tumbling 22.3pc to £14.3m, a drop that Ladbrokes attributed to unfavourable sports results. Jim Mullen, who was recently appointed chief executive, will outline his plans for the beleaguered bookie on June 30. The stock closed up 5.1p, or 4.4pc, at 122.1p.|
|strathroyal: Don't see why the dividend is such an issue. Wm Hill pays a div of 12.2p and has a share price of £3.70, Lads pays 8.9p and has a share price of £1.04. So with the yield being near 9%, it is clear that institutions expect a significant dividend cut.
Add to that LAD has a new CEO who you would expect to do the old kitchen sink job (and it looks like he will do that by June), so it will be very surprising if the dividend is not slashed. Recovery in the share price depends on how his plan is received and whether the bid interest from the private equity sector is genuine.|
|balcony: The news on 888 could boost LAD share price,The whole sector will be bought|
|speedsgh: Mention of LAD in Mr Bearbull's latest article on his Income Portfolio on IC website...
"By far the biggest loser was the holding in bookmaker Ladbroke s (LAD), about which I wrote most recently on 14 November 2014. Naturally, it would have been lovely if I had sold the fund’s holding in Ladbrokes when its share price dropped below the stop-loss trigger at 182p late in 2013. That alone would have added 3 per cent to the fund’s end 2014 value. But I didn’t. I reckoned there was more upside than downside in the share price and I have reached the same conclusion several times subsequently.
Each time I’ve been proved wrong and the situation does leave me wondering if I am missing bearish factors staring me in the face. It’s true Ladbrokes’ bosses made a complete Horlicks of installing a decent ‘digital’; (ie, online) betting platform. But it looks like they got there in the end.
Meanwhile, I’ve crunched the numbers again and find that, even if the best Ladbrokes can do long term is to equal 2013’s free cash flow of 10.8p per share, that would justify a value of about 127p (against a current share price of 109p). If the average free cash of the past five years – 15.4p – was do-able long term, that would generate value of about 180p. In addition, Ladbrokes does some capital spending in excess of depreciation – 2.2p a year on average. Depending on assumptions, that could add between 30p and 60p per share of value. In other words, it’s tough to come up with a per-share value much below 160p and feasible to reach around 240p.
Naturally, doubts remain – if Ladbrokes shares are so cheap, why am I the only one to notice? Yet it’s not as if the company operates in a declining industry. For reliability of income, few occupations beat bookmaking. So I think I’m managing the Ladbrokes holding sensibly."|
|andyj: LAD share price is incredibly volatile for such a staid business, which makes them very 'tradeable'. The dividend is extremely tempting and aside from potential regulatory issues ahead, I really cannot find anything in the trading statement to provoke such a sell off. Technically, that dip to 110 has made the chart looking very negative, it looks likely to re test that soon. But with a yield of around 8%, confirmed, trading in line with expectations, surely common sense will prevail soon. I will be back in this week.|
|rcturner2: monty, the market tends to look forward
LAD share price has been down sharply for 18 months as these painful figures have been expected. What happens from here is what is important. You pays your money and takes your choice. I believe that LAD is a good long term prospect at these prices, with the added bonus of a bid quite possible.|
Ladbrokes share price data is direct from the London Stock Exchange