UK 250 equity research

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UK 250 Equity Research

Broker research, valuations, & analysis on the UK 250

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Strong set of full-year results, comforting guidance

  • 23 Mar 17

GVC released a solid set of full-year results. Key highlights Pro forma Net Gaming Revenue (NGR) was up 12% at constant currency, or 9% on a reported basis at €895m, in line with the February trading update. Pro forma clean EBITDA was up 26%, at €205.7m, bang in line with AV’s €206m forecasts, translating a three percentage points increase in margin added to the growth in revenue. c.69% of NGR was derived from markets either regulated (including those in the process of regulating) and/or locally taxed (68% in 2015), while 95% of the revenues were derived from GVC’s proprietary platform. Net debt stood at €131.5m or 0.6x clean EBITDA. The board proposed a second special dividend of €0.15, giving a total dividend of €0.30 per share for the year, beating market expectations. Guidance The start of 2017 seems promising as management said that daily NGR had increased by 15% (+16% cc), translating into an 18% (+19% cc) growth in sports labels’ daily NGR and a 6% (+8% cc) increase in games labels’ daily NGR. The gross win margin reached 9.5% while it should move towards the 10% mark on the long term. Regarding dividends, the group confirmed a progressive distribution policy and expects to distribute at least 50% of the group’s free cash flow, starting from 2017. Debt refinancing In the first quarter of 2017, the group issued a €320m Senior Secured Term and Revolving Facility, composed of a €250m term loan (maturity 6 years) and a €70m revolving credit facility (maturity 5 years) used to pay down the Nomura Loan in full.

Breakfast Today

  • 22 Mar 17

U.S. stocks, the Dollar and government-bond yields pulled sharply back on Tuesday, with the principal equity indices suffering their steepest declines of the year. The Dow Jones Industrial Average was hit in excess of 1% for the first time in five months, with the S&P 500 and Nasdaq tumbling even more. Doubts regarding Trump’s ability to garner sufficient support from House Republicans this week to dismantle the Affordable Care Act came to the fore; seen by some as a proxy on his mandate to govern, concerns quickly spread to his ability to force through ambitious tax, policy and budgetary measures on a reasonable time schedule. As a result, touch-sensitive investors holding overweight equity positions on heady valuations needed little encouragement to lock in some of their substantial profits. Financials led the falls, tracking bond yields, with industrials following behind. The US$ retreated for the fifth consecutive day, similarly hitting its lowest level against the international basket in four months. European sentiment followed the US markets south during afternoon trade, with early strength deserting the Stoxx Europe 600 to see it close down 0.5%. The FTSE-100 did likewise, having been hurt earlier in the session by higher than expected Consumer Inflation figures that were released mid-morning and saw February prices hitting 2.3%, their fastest pace in nearly three and a half years, breaching the BoE’s 2.0% target in the process having spiked from 1.8% the previous month. Unless wage growth is seen to catch up rapidly and Governor Carney holds sufficient nerve to keep base rates unchanged while Theresa May commences Brexit negotiations, consumer spending, the key economic driver for the UK, could start to stall. Sterling not surprisingly rose sharply against the US$, although its gains against the Euro were limited given increasingly perceived diminishing chances of Le Pen now claiming victory at the forthcoming French Presidential elections, following Monday evening’s televised debate. Asian stock markets followed suit this morning, as the region also examined its optimism around the 'Trump trade'. Japan's Nikkei Stock Average was down over 2% to a three-week low ending a whisper from the key 19000-point support on surging Yen, with the ASX and Hang Seng closing just a little way behind. There are no significant UK macro releases due today, but the EU is due to provide its Current Account data for January, while the US follows later this afternoon with MBA Mortgage Applications, its Housing Price index and Existing Home sales. UK corporates due to release earnings or trading updates include Kingfisher (KGF.L), Ferrexpo (FXPO.L), Softcat (SCT.L), Cello Group (CLL.L) and EG Solutions (EGS.L). Investors will also be awaiting news from the Scottish Parliament later today, with Members due to vote on a second Independence Referendum. London accordingly is set for a nervous opening this morning with the FTSE-100 see down around 40 points in early trade.


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