32red Share Discussion Threads

[bamboo2] 24/11/2016 21:16

Delayed reaction on the turn, but looks strong now. An eod close above 137.5 [and above 200sma] confirms an INVH&S with a tp of 152

[hutch_pod] 24/11/2016 10:15

Didn't see any surprises in the Autumn Statement.. Hopefully some relief here.

[bamboo2] 22/11/2016 20:55

Potential turn tomorrow indicated by the apex of the prior falling wedge.

[simonsaid1] 18/11/2016 11:57

I can't find any record of this downgrade, and the prices you're citing aren't related to this stock. Wrong thread, tattooed?

[tattooed93] 18/11/2016 10:39

downgraded by broker numis, forecast cut from 11p to 8p

[inlovewithaltitude] 17/11/2016 16:25

id loveee 300p

[simonsaid1] 17/11/2016 16:24

I'd love to see 170, but from what I've read on here there are still some regulatory concerns. Even if the affect on TTR is minimal or nil, it'll still keep the stock price suppressed for a while. I have a paltry holding so not overly worried either way but curious what people think could drive the stock price here.

[nw99] 15/11/2016 12:49

Wide spread looks like the market maybe short of stock

[bamboo2] 15/11/2016 09:50

nw99, thanks for noticing on Friday. Took a small amount, with an initial tp at approx 144

[nw99] 11/11/2016 15:41

Chart support just bought in here

[bamboo2] 10/11/2016 20:43

The chart is following the price action, not driving the price.
I work on daily charts, ie eod closing prices.
The days candle is a historical record of the price action. The trendlines derived from the record suggest commonly occuring patterns.
The patterns offer buy and sell signals, with the added benefit of target setting.

[simonsaid1] 10/11/2016 17:20

So you really think this stuff is what's driving the price, rather than the renewed regulatory interest? I don't see how any of this could affect it.

[bamboo2] 10/11/2016 16:50

The target for the H&S was hit today, but frustratingly, we still have no clear direction of share price from the Falling Wedge, so we continue to wait...

[bamboo2] 09/11/2016 19:55

A somewhat positive day for TTR, in chart terms as the gap around 120 has been filled. There is a small H&S with a target at 118.50, but more important is the direction of the breakout from the falling wedge. Keeping a close watch here.

[simonsaid1] 08/11/2016 16:47

All that really shows is that Technical Analysis is still mostly just retrospective pattern recognition and very rarely any kind of usable indicator of future direction except in very rare circumstances. Buffet has said this for a long time, among others.

[paleje] 08/11/2016 16:20

Mail Money did an article on LCL a few days ago, pretty positive.

3i covered LCL also on 04 Nov saying potential 65% upside, acknowledged risks:

ST covered 32Red specifically in Sept and listed the risks as he saw them and, with the share price then at 140, rated them a strong buy. The risk part (which was before the recent announcements directed at the gaming industry) is below. I still hold and at a low average so have enjoyed divis, but not adding just yet even though I believe in the management quality, next update Jan I think:-

(ST)
Risk assessment

Of course, no investment is not without risk and there are a few to consider in the gaming sector, the most obvious is regulatory risk.

For instance, licence conditions and tax rates could change in 32Red’s markets. For example, HMRC is currently consulting on the precise way that Point of Consumption Tax (POCT) will be extended to free play from August 2017, which is likely to change game play and impact margins. Edison have factored in a 2-3 point increase in the effective POCT rate in their forecasts. In addition, earlier this year HMRC issued an informal working paper on VAT becoming chargeable on advertising services bought in the UK by Gibraltar based companies like 32Red, but at this stage it is impossible to know how it would work or quantify the financial impact of it either.

32Red also derives about a quarter of its revenues from countries that are unregulated. Some of these countries, including Holland, are in the process of introducing regulation which could introduce new costs or taxes, while others are yet to regulate.

Competition is a worth considering too. That's because 32Red operates in highly competitive markets and is up against larger rivals with significantly larger marketing budgets. That said, the company's management is experienced and has a strong brand presence.

The risk of an economic slowdown is also worth flagging up. The gaming sector has proved resistant to economic slowdowns in the past, including the last major slowdown of 2007-08, but this is not to say that it will fare so well in the future.

Finally, Brexit could be an issue. That's because 32Red is based in Gibraltar and would be affected if Gibraltar followed the UK out of the EU or if it became part of Spain, as unlikely as that would seem. That said, 32Red holds local rather than EU licences and the Gibraltar government has been keen to stress its flexibility and desire to support its gambling industry as the terms of the UK’s future EU relationship unfold.

Having taken all these risks into consideration, I am of the opinion that for my time horison at least, none of these are unlikely to detract from the positive operating back drop the company is currently enjoying, nor prove detrimental to investor sentiment.


Target price

So, having first recommended buying 32Red’s shares at 51.75p ('Game on', 7 Jul 2013), since when the board have paid out a total of 12.5p a share in dividends, and last advised running your profits at 134p ahead of yesterday’s results (‘Spinning higher’, 2 Aug 2016), I now feel there is a high probability of the share price returning back to the March 2016 all-time high of 186p, and possibly beyond. If achieved it would price the shares on a more reasonable 13 times next year’s earnings estimates, a fair rating in my view given the EPS growth profile. More importantly, these targets look achievable.

Interestingly, the chart set up is bullish as a close above the 152p summer highs would set up the share price for an attack at the 186p highs dating back to March. The 14-day relative strength indicator is not overly stretched, and the MACD momentum oscillator is above its signal line and in positive territory, so the technical set-up is supportive too.

On a bid-offer spread of 140p to 141p, valuing 32Red’s equity on a modest seven times cash profit estimates for 2017 to its enterprise value, I rate the shares a strong buy.

[shaker44] 08/11/2016 13:48

Why?? Same reason hat you say Topps could tank? Or are you short on both??

[simonsaid1] 08/11/2016 10:31

Stock was drifting, some regulatory concerns (whether valid or not), and I think now a lot of Stop Loss sells triggering. It's a bit of a snowball effect. I have a very small holding so going to ride it out, but until all these stop losses are done, it's hard to know how low it'll fall. If you still believe in the fundamentals, now would be a Buy moment, but I'm not confident enough personally.

[grgmacleod1] 07/11/2016 17:28

Why the drop

[bamboo2] 07/11/2016 09:45

Would be good to get that earlier gap around 120 filled. There's currently a small H&S pattern [pink] with a target just below 120.

[simonsaid1] 28/10/2016 13:01

Enormous movement on share price today, how odd. As low as 124gbx at one point, now back up. Madness.

[johnv] 25/10/2016 20:07

Interesting chart bit more simple than previous. A burst upwards with a large volume would be nice.

free stock charts from uk.advfn.com

[paleje] 22/10/2016 11:33

I agree, one 'bet' a year on the National is my lot, AIM is quite enough excitement:)

It seems the inquiry is at an early stage and aimed more at bookies so far but it concerns me if there's an agenda. Having said that 32R have proved very adept and handling regulation and I think management are right on top of things but it's worth keeping aware.