William Hill Plc

FTSE 250-listed William Hill Plc (LON: WMH) is a London, United Kingdom-based Company, which is engaged in the gaming and betting business. The Company’s operations are differentiated into three businesses, namely Online, William Hill US, and Retail.

On 11 November 2020, the Company will release the trading statement.

Financial Highlights (H1 FY2020)


(Source: Company Website)

On 5 August 2020, the Company provided an interim result for the 26 weeks ended 30 June 2020, with a decent trading before COVID-19, good recovery post-lockdown, and effective cost control during a lockdown. Led by a temporary closure of retail activities and COVID-19 disruption to sporting events, the net revenue was down by 32% year-on-year to £554.4 million in H1 FY20 (H1 FY19: £811.7 million). However, the online net revenue for H1 FY20 surged by 1% year-on-year, due to growth in International, successful product launches, and a progressive resumption of sports events post-lockdown. In H1 FY20, the adjusted operating profit of £11.8 million was ahead of expectations due to new Online content and swift actions to control costs. Net debt decreased to £340 million from £536 million at the end of December 2019. During the period, the Company has raised £218.6 million from the equity placing and had £205 million of the RCF (revolving credit facilities) drawn on 30 June 2020. At the end of the period, cash and cash equivalents stood at £671.6 million, an increase of £212.2 million from the year-end.

Share Price Performance


1-Year Chart as of 6 August 2020, before the market close (Source: Refinitiv, Thomson Reuters)

William Hill Plc’s shares were trading at GBX 126.20 on 6 August 2020 (before the market close at 9:00 AM GMT+1), down by 1.10% against the last day closing price. Stock 52 week High and Low were GBX 206.80 and GBX 28.63, respectively.

From the technical standpoint, 14-day RSI is currently in an overbought zone, which means the stock price could decline in the short term.

Key Risks

COVID-19 has presented short-term challenges.It mainly causes the risk to footfall in the retail operations in the US and UK.In the short-term, the Group would face a decline in revenue and profit, due to postponed or cancelled sporting events and closure of US casinos.Moreover, the material risk relates to ongoing consultations arising from the Gambling Commission.

Valuation Methodology



Conclusion

The Group stated that it made a good start to the second half of 2020 after underlying profits decreased by 85% in H1 FY20 due to impact of the COVID-19 lockdown on live sport. However, the Company is still not feeling confident enough about the outlook to provide financial guidance, primarily driven by the uncertainties created by COVID-19. But after raising £224 million cash and with a decent recovery in the opening weeks of the second half of 2020. The Group has decided to return £24.5 million of funds that had been received as part of the UK government furlough scheme. Also, the decision has been taken not to reopen 119 shops.  Following the completion of Eldorado’s acquisition of Caesars, the Group has access to 25 states with an estimated 29% market share. Overall, the Group is trading decently and cash generative now, with a swift recovery of retail.  

Based on the headwinds faced by the Group and uncertainties in near-term due to Covid-19 pandemic, we have given a "WATCH" recommendation at the current market price of GBX 126.20 (as on 6 August 2020, before the market close at 9:00 AM GMT+1), while we look for any upcoming catalysts in the near term.

Playtech Plc – Resilient Performance in the First Half of 2020

Playtech PLC (LON: PTEC) is United Kingdom-based FTSE 250 listed developer of gambling software. It was founded in 1999 and presently, operates with three segments Gaming B2C, Gaming B2B and Financial.

On 17 September 2020, the Company will announce the interim results for the six months period to 30 June 2020.

Trading Update (as on 5 August 2020)

The Group provided an update on the first-half performance and current trading. In the first half of 2020, the Company delivered a resilient performance, due to the online business and the exceptional performance of the trading platform, TradeTech. Despite the COVID-19 pandemic, the adjusted EBITDA was over €160 million in the first half of 2020. During the first six months of 2020, TradeTech benefited significantly from increased market volatility and trading volumes. Moreover, the Group witnessed a strong performance in July 2020, with continued strength in online and many sporting events resuming (including TradeTech). Further, the Group’s adjusted EBITDA in July 2020 approached normalised levels. At the end of June 2020, the Company had more than €600 million of available liquidity. Early in the third quarter of 2020, it received the remaining €36 million from the sale of Snaitech land in Italy.

Share Price Performance


1-Year Chart as of 6 August 2020, before the market close (Source: Refinitiv, Thomson Reuters)

Playtech Plc’s shares were trading at GBX 334.60 on 6 August 2020 (before the market close at 9:05 AM GMT+1), down by 0.77% against the last day closing price. Stock 52 week High and Low were GBX 442.10 and GBX 111.00, respectively.

From the technical standpoint, shares were trading above the short-term support level of 50-day simple moving average price, which reflects an uptrend in the stock and carrying the potential to move up further.

Key Risks

The requirement to keep adequate regulatory capital may affect the Group’s ability to conduct the business and may reduce profitability.The Group’s liquidity will also hamper because of the ongoing circumstances related to COVID-19.

Valuation Methodology 
 


Conclusion

The Company’s online businesses witnessed significantly heightened levels of activity. Revenues in B2B Sports have started to recover and the reopening of betting shops in the UK and Greece. In B2C Gambling division, the impact was minimised by the low fixed costs in the business. The Group’s business in Asia was also impacted by government restrictions. However, it benefited from a contract with a leading provider of Live Casino in the region. It has taken a prudent and disciplined approach to banking relationships. During the period, the Company is expanding relationships with the existing customers and adding new brands. Playtech has entered the New Jersey market with the long-standing strategic partner bet365. Overall, the Group has demonstrated a positive momentum and continued to focus on setting up the business for success in the long-term.

Over the past 4 years (FY15 – FY19), the Company’s revenue surged from €630.09 million in FY15 to €1,508.45 million in FY19. Compounded annual growth rate (CAGR) stood at 24.39%.
Considering the uncertainties and market dynamics, we are currently maintaining the “Hold” stance at the current market price of GBX 334.60 (as on 6 August 2020, before the market close at 9:05 AM GMT+1) and will recommend fresh buying at the right time.
 
*Dividend Yield may vary as per the stock price movement.
*All forecasted figures and Industry information have been taken from Refinitiv, Thomson Reuters.

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