Gaming investors hit jackpot

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Australia’s gaming, wagering and casino sector continues to deal investors winning hands as shares soar thanks to robust profit results last week and the prospect of a new wave of rationalisation.

 

Jupiters Ltd, Aristocrat Leisure, Tabcorp Holdings and TAB Ltd each confirmed their growth status with earnings results that either exceeded or were in line with market expectations.

 

The four gaming stocks generated a combined $369.7 million net profit, offering some investors pre-tax yields of almost 10 per cent.

 

Hunger for acquisitions and offshore expansion provide new opportunities for shareholders to ride the wave of gaming growth over the next 12 months. Stockbroking analysts said share buybacks and capital returns were also possible.

 

TAB Ltd, which posted a 9.6 per cent lift in profit to $73.31 million on Friday, said it was scouting for acquisitions to broaden its revenue base. TAB shares slumped 5.5 per cent per cent or 16¢ to $2.73 after managing director Mr Warren Wilson warned that earnings growth could slow this year.

 

Analysts believe Queensland casino Jupiters and TAB Queensland are likely to be in TAB’s sights. Mr Wilson admitted that TAB was eyeing opportunities in the leisure and entertainment sector, but said anyone moving on Jupiters would have to launch a friendly bid.

 

“Rob Hines [Jupiters’ chief executive] is on the record saying they’ve got that foundation shareholder scenario, and he believes their protection against a wholesale takeover is pretty bulletproof. So, if anyone wants to take over Jupiters, I suppose that means they’ll have to do a friendly.”

 

Aristocrat, which reported a 16.2 per cent lift in interim net profit to $31.6 million, is touted as a possible outside bidder for Jupiters, notwithstanding takeover restrictions.

 

But Aristocrat says it is focused on offshore expansion and revenue growth, with 70 per cent of revenue likely to be sourced overseas by 2003. The group is seeking opportunities in Japan and the US.

 

Jupiters is close to regaining its crown as Australia’s premier gaming group after a 14.4 per cent jump in net annual profit to a record $77.1 million. It is looking to expand its fast-growing Centrebet business in northern Europe. Centrebet is expected to fuel double-digit growth for the group in the next 12 months.

 

Analysts say Tabcorp is under the greatest pressure to expand outside Victoria. Tabcorp shares rebounded on Friday, rising 14.8¢ to $9.02 amid suggestions that a share buyback or capital return could be on the cards in the medium term Togel Hongkong .

 

Tabcorp posted a 7.4 per cent lift in net profit to $187.68 million for the year to June 30, below market expectations after losses from Star City’s high-roller business, which has since been suspended.