William Hill PLC

London, United Kingdom-based William Hill PLC (LON: WMH) is the most trusted brands in the industry and one of the world’s leading gaming and betting companies. It was established in 1934. The company has more than 15,500 people employed in 12 countries. The group is building a digitally-led, globally diverse business. The company is differentiated into three business, namely online, William Hill US, and retail.

On 26^th February 2020, the company will announce the full-year results.

Recent News
On 13^th January 2020, the company announced that Ruth Prior, as a Chief Financial Officer (CFO), has notified the Board of the group of her intention to step down as a Director of the Company and as CFO.

Trading Statement (as on 13^th January 2020)
The company released a trading update for the unaudited fifty-two weeks ended 31^st December 2019. For the full year 2019, the company’s adjusted operating profit from continuing operations will be in the range of £143-£148 million, due to favourable sporting results through the year-end. This range is also ahead of management and market expectations. In the retail business, the group has generated operating profit above the previously guided range of £50-70 million, driven by mainly favourable sporting results in December 2019. Gaming from the retail business also performed ahead of anticipations. In the United Kingdom, the online business increased in line with the market for the third consecutive quarter. Still, weakness in the net revenue from online gaming was offset by a robust sporting gross win margin. On a pro forma basis, the international performance from an online business was mixed with net revenue anticipated to be broadly flat in Q4 FY19. In International online business, the net revenue from sports book was weak while gaming shows a decent performance driven by Mr Green. In the US business, the company continued to generate robust growth in Q4 FY19, due to the disciplined investment and wagering growth. For the US business, the company expect to be at breakeven level in 2019 as compared to the previous range of $0 million to -$20 million.

Share Price Performance

Daily Chart as at February-13-20, before the market closed (Source: Thomson Reuters)

William Hill PLC shares were trading at GBX 193.80 at the time of writing before the market close (at 8:15 AM GMT) on 13^th February 2020 and were down by 1.148% versus the previous day closing price. Stock 52 weeks High and Low are GBX 206.80/GBX 128.41. The group’s stock is reflecting the lower volatility as against the benchmark index based on the company’s beta of 0.84.

Valuation Methodology

*Peers: GVC Holdings PLC, Playtech PLC, 888 Holdings PLC, J D Wetherspoon PLC, and Whitebread PLC.

Conclusion
The company has delivered a decent operating performance,against a challenging regulatory backdrop, and ahead of the expectations. The group has made decent progress on several fronts, including the US business, Retail business, and Online business. In 2020, the group looks forward to developing on these efforts with a decent focus on execution and customer.

The company’s operations can be affected negatively due to uncertainties created over the Brexit, as it would disturb the business. As the company operates in multiple geographies, its profits can be impacted negatively due to foreign exchange rate fluctuations.

Currently, the stock is trading near the 52-week mid, suggesting that the upside potential might be limited, and the company can face stiff resistance at the current level.In the future, environmental regulations, foreign exchange risks and expansion by competitors could affect its business operations.

Based on the risks faced by the company and valuation as done using the above methodology, we have given a “Watch” recommendation at the closing price of GBX 196.05 (as on February 12, 2020), while we look for the growth catalysts in the near-term.

Pelatro Plc

Pelatro Plc (LON: PTRO) is a software & computer services company offering marketers from the telecom space with innovative and problem-solving solutions. The software offered by the company is helping companies from the telecom industry to achieve optimum business results. The company’s product offering includes mViva Unified Communication Management Solution, mViva Data Monetization Platform Solution, mViva Loyalty Management Solution and mViva Contextual Marketing Solution.

Pre-Closing Trading Update (Full-Year ending 31^st December 2019)
On 22nd January 2020, Pelatro released an update for full-year trading period ending 31st December 2019. During the period, the company expects its reported revenue and adjusted EBITDA to be in line with the management’s expectations. The company is focused on the recurring revenue model and has helped the company to achieve significant growth in the revenue. Driven by an increase in the revenue, the company expects its income for the financial year 2020 to rise and is expected to be USD 4 million (approximately). The cash collection in the second half remained strong with a gross cash position of around USD 1.1 million versus USD 1.1 million as on 30th June 2019. The debt on term basis stood at USD 0.6 million, and trade receivables excluding contract assets were around USD 5.5 million for the period.

The company, with its recent contract wins, showed strong commercial momentum. The company’s fully operational software is now used by 19 customers, and 5 were won in the year 2019. The company, as announced on 2nd December 2019, has won a contract with one of the largest global telecom company. The contract is currently in the implementation phase, and the company is implementing additional products with two existing customers as well. The company’s pipeline remained strong, with around USD 16 million, which include USD 6 million from existing customers. The company continue to upgrade its product offering, and its mViva CMS is now at version 6.0. The company is focused on increasing its sales presence with prime focus on Latin America, Central America and Asia. The company has an employee base of 160 professionals in the competitive market.

Share Price Performance

Daily Chart as of February 13^th, 2020, before the market close (Source: Thomson Reuters)

Pelatro Plc shares were trading at GBX 54.75 at the time of writing before the market close (at 9:08 AM GMT) on 13^th February 2020 and were same versus the previous day closing price. Stock's 52 weeks High is GBX 98.00 and Low is GBX 31.00. The shares of the company have delivered a positive return of 17.49 per cent in the last three months.

Valuation Methodology


*Peers: Altitude Group Plc, Crimson Tide Plc, Dillistone Group Plc and Arcontech Group Plc.

Conclusion
The company has shifted its focus to a recurring revenue model, and which resulted in strong revenue growth and an increase in the income as well for the period. The company is having a strong pipeline and is benefited by the commercial momentum.The company operates in a challenging environment which requires continuous investment, sometimes at the cost of profitability, to stay ahead of competitors.

Pelatro being an IT company needs to do innovation to stay on top and failure to bring technological advancement may affect the company’s market share. The company’s success lies in the partnership and strategic alliances it makes, any failure in the development of relationships with third parties will affect the company’s reputation and might negatively impact the financial performance.

Based on the headwinds faced by the group, we have given a "WATCH" recommendation at the current price of GBX 54.77 (as on 13^th February 2020, before the market close), while we look for any upcoming catalysts in the near term.
 
*All forecasted figures and Peer information have been taken from Thomson Reuters.Currency exchange rate taken for 1 USD = 0.77136 GBP.

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