Best Of The Best Share Discussion Threads

[peart] 24/8/2020 18:47

I see every possibility of a share price, with no successful FSP, of circa £30+ by this time next year.

[peart] 24/8/2020 18:43

Also. we are now almost 4 months into the current financial year with a company that has a fabulous growth trajectory, certainly for the next year or so at the very least. That gradually has to get priced in as before long we will be focusing on fwd EPS for the year to April 2022.

[peart] 24/8/2020 18:40

Obviously the market will decide this over time, but currently I'm not so sure there is much of a bid premium in here. The FSP was announced when the share price was circa £12.50 and fwd EPS of 0.70/share. People on this panel seem to have concluded that we are probably tracking closer to fwd EPS of 1.00/share. Do the maths and the current price when compared to that new estimate equates to £17.85, which is circa where we are now. Just a view....

[steptoes yard] 23/8/2020 19:08

Pasty
Like all matters of faith everything is open to interpretation!

[pastybap] 23/8/2020 15:49

Hi Steptoes Yard, I also had noticed that a significant number of winners are of a certain demographic - Asian. Do you know of a reason for this? Are there certain rules that allow this as a skilled game, rather than gambling? And does it open the company up to potential growth markets in relevant Asian countries?

[steptoes yard] 23/8/2020 14:25

With board members holding 75% of the shares they, more than most uk companies I know, are very much "controlling" the future direction of the company.

I've looked at some of the competition and havent seen anything remotely near encroaching on their patch. In my day it was Zetters, Vernons and Littlewoods but im showing my age and of course in the last 25 years we have seen the National Lottery where the chief beneficiaries of the revenue generation would be the Royal Opera House or other similar waifs n strays.

I'm noticing and observing (but not objecting in any form) the demographic of the winners on the cars. I ask in the spirit of guaging the retention of punters (in the USA for Saas companies there is an obsession with DBNER and DBNRR whic is similar but not identical to this). These are analysed with as much scrutiny as revenue and eps in high growth ops. I cannot speak for the Lifestyle comp but there appears to be a "growing and retaining punters" trend in the high perormance cars comp. I wonder to what extent this has been spotted elsewhere.

If I am right about the gap left by Zetters et al and the high bar prizes of the National Lottery and Euromillions then this leaves a fertile runway/larger TAM than I initially thought. Peeps want a realistic chance of winning and it doesnt have to be an eight figure sum, many millions of which (as history shows) they could really do without.

If I'm right about all of what Ive said (and please challenge me if i'm miles off) then this company is pre S curve even at these prices.

[serratia] 23/8/2020 13:18

Re why not run flat out all the time. Just some thoughts.

Markets like to see steady progress so they can trust their future share prices. In the absence of major changes either way, strong steady progress would be my aim. If the revenue jumps dramatically one year but levels off the following year it might be interpreted as going 'ex growth' and the market would attribute a smaller price ratio to profits.Also if they up the spend on marketing I would think margins would drop slightly even though they've got plenty of head room. I don't know how the market would respond to a drop in margins, who knows?
Strong steady progress retaining some fire power if needed due to some unknown event is probably their line of thought. Pre bid I saw revenue generation from my model this half fall back a bit from the last month of the last results then rise, fall back and then stay steady up to the bid approach. I'd interpreted that as the steady state growth they've aimed for for H1. The fact that they accelerated growth post bid talks gives me confidence that post H1 results they are able to keep growing at a descent rate.

[serratia] 23/8/2020 13:00

Peart,

Web traffic is part of it but there are a lot of indicators that can also be derived. I'm always playing with figures to try future predictions. When I first looked at BOTB I started with a basic model and it's evolved over time.
When I first started the price was sub £3 and my model was signalling from memory £4.80. I invested as there was sufficient margin for error. Sadly as it was work in progress at that time I didn't go in too high as the model needed to be tested against results. The model has been further developed and has been accurate on revenue generation. From revenue I can work down to cash flow. From there we come to an unknown which is the share price the market attributes to cash flow. To get a feel for that I look at the ratio of share price to cash flow going back up to 5 years. This gives me a range for the minimum/maximum ratio attributed to the share. This has moved around a bit but at the max end the market seems to give a figure of roughly 23* the cash flow at the level I measure it so over the financial year I use the 23* to estimate the top end. As they are growing well it gravitates towards the higher figure.
From the last set of results my prediction was £11 based on past figures. As they're still growing the price moved up along with my target as I track the coming half. The price has risen past the £11 as buyers factor in continuing growth and then the potential bid premium.
I have no insight what BOTB would accept or what bidders would pay. Also pre bid news I could see a steady revenue growth which implied a share price above the present £17. The bid approach caused them to push revenue generation at least for 4 or 5 weeks. I've noticed a pull back this month so they were showing bidders what it could do.
I would expect a bid to be in excess of £17, if the bid fails I would think it would drop back by whatever the market has added as a bid premium. If it drops back on the absence of a bid I'll add more.
I haven't given future price projections and I'm not qualified to give advice so it's down to DYOR.

[steptoes yard] 23/8/2020 12:56

In the context that it costs circa £2 to attract (generate) £30 in revenue, the previous question is a pertinent one.

[valustar1] 23/8/2020 08:12

If the extra marketing pays for it self why would they turn it of

[peart] 23/8/2020 07:24

Am I getting it right serratia, you assess BOTB revenue based upon web traffic that you study? You've created a formula that seems to work and you've proved it several times with your estimates/compared to actual results??

[serratia] 22/8/2020 14:07

I think the latter forcing the bidders hand. Earlier in the financial year I had them going for an operating cash flow of £1/share. Then the bid talks started and they pressed the pedal on marketing and now have an average YTD of £1.20 with July hitting £2.
They'll now be able to show the Q1 figures and the potential as shown by July. It's now over to the bidders. If they back out I'd expect the figures to drop back towards £1 for the half year.
Upside against that is the extra from the mid week game. Downside the increased marketing spend over the last 6 weeks or so.

[peart] 22/8/2020 13:19

I hope the latter. If the numbers you suggest are correct serratia, then the year as a whole must be tracking well for above £0.70/share

[peart] 22/8/2020 13:17

Could things be backing off due to Coronavirus easing a bit?? I wonder... Or is it all controlled by their marketing/advertising spend?

[serratia] 22/8/2020 11:29

In H1 last year revenue was £7.6. In H2 it was £10.2m. This half they seemed to be settling on a £13.7m target. Then the bid arrived and they opened up to show what they can do. The last months high revenue generation has pushed the projected overall rate rate to £15.2m. 6 mths at July's rate would be £21.8m for a half year.
On August 4th they backed off as they've proved their point and the rate is dropping back slightly. I'd expect H1 revenue to be £13.7m upwards.

[valustar1] 21/8/2020 16:49

I was thinking the trading update would be on the AGM date 16th sept

[peart] 21/8/2020 15:22

We should get a trading update circa 3 weeks which will hopefully be positive. Last years was on 11.9.20. Whether the FSP is mentioned at that time, if not before, who knows.....

[ryanc106] 18/8/2020 21:45

Very quiet in BOTB land currently. I wonder what’s happening behind the scenes...
Certainly very little volume going through so holders seem to be very reluctant to sell awaiting newsflow.

[serratia] 15/8/2020 20:33

They're on a run rate this half of £10m+/year. Re copying the model - They have 0.5m players built up over time. With their present revenue/margins they can afford to give out expensive prizes. Anyone trying to break in would be loss making for some time and more so if they matched the prizes.
If it was easy to replicate they wouldn't have any bidders as they would just do it themselves.

[mammyoko] 15/8/2020 20:32

I think you are under-estimating the effectiveness of their marketing and the strength of the brand. The direct competition, such as it is, are streets behind and have a fraction of the players. If it is, as you suggest, without a moat then it would be reasonable to expect much bigger gambling companies to enter the market. None have yet done so even though BOTB have been around growing profits for years. I think it is harder than you are suggesting to do so and anybody who tries could easily blow through a hundred million without succeeding.

[bookbroker] 15/8/2020 18:47

£10 million operating profits needs to be hit to justify current mkt. cap.!

[bookbroker] 15/8/2020 18:45

I liked this stock for a while, that was when it was a few quid, but current valuation potty, this is a model that can be repeated anytime, anywhere with a few bucks expenditure on marketing. Fantastic cash flow, but that is all, it is just a raffle with a twist, seems to have the Tesla mojo!

[peart] 15/8/2020 11:55

I'm with you on your comments mammyoko....