Gamingking Share Discussion Threads

[wiganer] 08/9/2006 16:26

cb- the share I hold at c50% of NAV is TGM.

[cbrown] 08/9/2006 16:17

Wiganer,

I agree that the key point is gaining some gearing based on one's initial purchase price of the share so that if the company suddenly picks up you can double or treble the value of your holding rather than add 50 to 70% to the value of your holding.

I'd be interested to know the 50% valuation of NAV holding that you have so that I can have a look at it.

I hold a very diverse portfolio of stocks including some which I think are very near or close to NAV so if I look at the stock you are referring to and buy it and it goes south, no sweat.

Unfortunately, when a stock is well below NAV it sometimes indicates that they don't actaully have a business and IMO what you are doing by investing is effectively investing in a start up even if the company has been established a while.

GGK are effectively a non-profit organisation at the moment which isn't totally a bad thing because they are sustaining jobs within their own organisation, paying direct and indirect taxes and contributing to the economy.

[wiganer] 08/9/2006 15:54

cb- the points you make are sound, and there's many a business trading at 50% or so of NAV (I know, I hold one already), so it is entirely possible GGK may drift there. HOWEVER, the point is that it does have that NAV protection, so that any improved sentiment/trading will have a positive "geared" effect.

Ceratinly if I was a potential acquiror I would expect to be able to squeeze GGK hard enough to generate considerably higher profits than at present. £0.5m would not be unreasonable. Of course, it is harder to see present management delivering that; time will tell. At the moment I will give them the benefit of the doubt to the extent that they should be able to improve on the past couple of years' bottom line.

[cbrown] 08/9/2006 15:52

Reading my own post, my instinct is that the share price will probably not hit 0.5p because it is IMO such a massive logical support level for the reasons stated above.

This therefore makes a buy at 0.75p look like a good buy with plenty of medium term upside if you are prepared to tie up your capital.

However, because a drop from 0.75p to 0.5p would represent a 33% loss on one's investment I am waiting for 0.5p before considering buying. 0.5p is mainly possible because this is such an illiquid stock and a few smallish sellers could cause it.

My argument against paying 0.75p is that you could be waiting at least a year for any improvement in company performance and it just ties your money up for no return.

[minho] 08/9/2006 15:45

cbrown well put, but we dont know yet what there will be in the way of extra revenue could be a forced drop with a big rebound,we all know what AIM is all about.Next week will tell all.ANY BETS.

[cbrown] 08/9/2006 15:33

Undervalued based on what? Unless growth and with it increased profitibilty can be confidently forecast then GGK can only be valued at 50% of its NAV at best which I calculate to be about 0.55p

The current £2.6M NAV is broken down as follows:

£1.34M in intangibles, which I assume is a valuation of web sites, the web site names, gaming licences, various other licences and exclusivity deals with customers, the ownership of gaming brand names etc. So this £1.34M is very much intangible and difficult to sell on if ever this was required.

£1.26M is in tangible fixed assets. Again, I assume these are lottery terminals, computer hardware, office equipment, company vehicles perhaps, possibly a small amount of property.

£0.43M in stock. A valuation of T Shirts, Lottery Materials, other merchandise etc

£0.61M in cash and securities.

£0.84M in debtors, this seems like a pretty high figure based on £5.29M of turnover and I'd be interested to know how much of this is just a rolling short term monthly/quarterly customer account settling effect and how much is long standing debtors? In other words, what is the real collection value of the £0.84M in debt?

£1.8M owed to Creditors. What rate of interest are GGK paying as this is a big debt for a small company?

If GGK really got into trouble I'd think that a rescue package buyer would probably only want to pay about 50% of the GGK valuation of their tangible and intangible assets which equals a share price of 0.55p (coincidentally all other items on the balance sheet net off) and in all fairness if you or I suddenly inherited £10M we also would probably only be willing to pay 50% of the NAV price for the whole company purely because return on capital has been very poor so far.

On the plus side cash and securities standing at £0.61M is I think a healthy and stable position to be in that will help enable the business to run smoothly and without too much financial stress for the next 12 months.

[bernieboy] 08/9/2006 14:52

I dont reckon it will drop any more. Looks way undervalued to me.

[marine boy] 08/9/2006 13:42

I think I'll wait until Monday, it could drop to 0.6p.

[marine boy] 08/9/2006 13:38

I'm sure it's been caught up in the gaming stocks panic. But I agree, it's hardly a dynamic company. I'm sure it could do better with its expanded club base brought about by the purchase of Kelly's Eye although it does now have an £800k debt to manage

[cbrown] 08/9/2006 13:06

Without wanting current holders to see the price fall any further, I am a potential buyer of GGK but at lower levels, 0.5p ideally.

I think the fall is for 1 of 2 reasons.

Either there is some bad news around the corner..........

or

Holders of GGK are looking at its £2.5M market cap and saying that £60K was the profit last time round and £23K the time before so even if you are optimistic and put £100K in as next time's profits you are only looking at a 4% return on capital. But of course the profit/loss is of such relatively small figures that a slight change in margins, turnover or costs could easily turn next time's results into being static or even less than £60K.

So despite the fact that the market capitalisation appears to be getting very near to equalling the NAV, some holders may feel like they are owning a piece of a £2.5M cow that isn't producing much milk. They may also feel that they have to wait another year to find out if profits and turnover have really improved markedly and therefore they possibly just want to liquidate their holdings and move on.

Also there doesn't appear at this stage to be anything spectacular planned that could produce exponential growth or expansion so it kind of makes the company look uninspiring and almost like owning a fixed rate bond, the only difference being that your annual return is between -5% and +10% but you don't receive it, it just gets reinvested in the company.

That's why I would like to purchase below NAV at a level of 0.5p so at least if the company's performance does improve there is some more potential profit leverage on getting in at 0.5p. Also 0.5p could be the sort of level that a buy out rescue package is struck at should GGK start doing really badly and making losses.

Good luck anyway to holders because this company is in a good sector and if it can become dynamic and think bigger than it currently does it could well multiply in value.

[retford1] 08/9/2006 12:34

Unless I am very much mistaken the drop is market sentiment rather than any particular issues with GGK. A good buying opportunity IMO, well done for "taking the plunge". I've topped up with 100k myself at 0.75p. Good luck!

[minho] 08/9/2006 12:32

Wigner best of luck I will wait a little longer,sector under a lot of pressure at the moment,but it will change,it will come good some time.

[wiganer] 08/9/2006 11:47

Have taken the plunge at 0.774p.
Let's hope plunge isn't an unfortunate choice of word.

[wiganer] 08/9/2006 11:36

Bought a few at 0.774p.

[marine boy] 08/9/2006 10:51

Can't understand this at all. Virtually no trades & severely marked down.
Expecting a trading update around October. GGK has now doubled its turnover and is increasing profits with a steady cash reserve. This should be going up not down, LOL.

[bernieboy] 08/9/2006 10:18

Down again. 0.85p to buy!

[hotfinance14] 07/9/2006 15:52

Who is the second person arrested ?

[lord santafe] 07/9/2006 13:05

LNG is the gaming stock to buy, fall from 70 to 51p to buy today.

[marine boy] 07/9/2006 13:04

Only if you light them EB.

[marine boy] 07/9/2006 13:04

Also, I think GGK has just been caught up with gaming stocks in general which have been marked down because of another arrest. GGK has no legally questionable operations in the U.S.A. A good topping up oportunity at a penny.

[english bigblls] 07/9/2006 13:02

Are they going to ban farting next then?

[marine boy] 07/9/2006 13:00

Actually, i'm in favour of the ban - filthy, disgusting, habit ;-/

[minho] 07/9/2006 12:37

The minority of do gooders are really making a mess of the uk not just this stock.