Market Report: Bwin.Party holds all the wrong cards
Saturday 31 August 2013
Punters decided all bets were off yesterday when Bwin.Party revealed its abysmal first-half results. The online poker specialist, which came from the 2011 merger of PartyGaming and Bwin Interactive Entertainment, said its full-year sales will be down at least 14 per cent on the previous period and the stock tumbled the most in two years. It blamed the disappointing figures on a new tax in Germany and competition for its bingo business online in the UK and Italy.
The City had been expecting it to report a weak first half but scribblers at Peel Hunt admitted the 16 per cent fall in sales to €342.5m (£293.2m) was "even worse than expected".
Punters folded and it was the worst performer on the mid-cap index, down 17.3p to 110p. Peel Hunt's Nick Batram predicted its third quarter will be even worse and will be its "nadir".
But Mr Batram still had faith in the group that trades online as Party Poker and Bwin and rated it a buy because new product launches, its New Jersey partnership in the US and a "meaner and leaner" business, which will emerge in 2014, make it look attractive. Although Mr Batram does say its "management credibility" is an issue and ultimately it is a trading stock "as opposed to a fundamental long-term buy" he said at the current level "the shares should be bought".
At the other end of the mid-tier table was another online business; grocer Ocado delivered a 16.5p gain to 330.5p.
The wider market was back in the red as concerns about military intervention in Syria came to the fore again. Mike van Dulken, head of research at Accendo Markets, said: "The focus moves to the possibility of the US going it alone and the Fed being forced into tapering on account of much stronger-than-expected US GDP data."
The FTSE 100 fell 70.12 points to 6,412.93 points and ended the week in negative territory. Scandal-hit security group G4S took the top spot, up 8.5p to 260p, after JPMorgan issued a positive note.
There was also optimism from Deutsche Bank's technology specialists, who said "ARMageddon fears are overdone" and it is time to buy Arm Holdings. They said fears the Cambridge-based microchips maker, which supplies the likes of Apple, will be hit by competition from Intel as well as a slowdown in smartphone sales growth, are "overdone". Deutsche's experts were so convinced of Arm's potential they gave it a double upgrade, from sell to buy, and said the business will "continue to dominate mobile chips" because it will take a while for Intel to catch up in terms of contract wins and technological performance.
Deutsche's experts more than doubled their price target to 1,080p. But investors needed more to be convinced and it declined 7.5p to 875p.
Vodafone rang up a 1.5p rise to 206.25p, the second day of strong gains after it revealed talks to sell its stake in its US joint venture to partner Verizon, which could lead to a bumper dividend for shareholders.
News that luxury goods brands Salvatore Ferragamo and Hermès have reported strong numbers, boosted by Chinese sales, lifted other European luxury stocks. British favourite Burberry advanced 4p to 1,534p and AIM-listed leather goods brand Mulberry was 6.5p better at 990p.
British American Tobacco and the Hong Kong-based China National Tobacco Corporation have agreed a tie-up to sell Chairman Mao Tse-tung's favourite brand of cigarette State Express 555. The new partnership will handle State Express sales worldwide. But BAT was out of puff and lost 16p to 3,255p.
Construction and property adviser Sweett Group built up 6.75p gain to 44.25p after a positive trading statement at its AGM. Analysts at WH Ireland raised their price target to 60p.
Indian wind-power producer Mytrah Energy secured $17.5m (£11.3m) of financing and ticked up 1p to 83.5p.
Savvy investor and Homeserve chief executive Richard Harpin made his second investment in Aim-listed sports drinks-maker Science in Sport, where cyclist Sir Chris Hoy is a brand ambassador. The group floated on Aim this month and Mr Harpin upped his stake to 5.2 per cent, from 3.9 per cent. Science was 1.5p stronger at 68p after floating at 56p.
Aim gold-mining tiddler Goldstone Resources revealed losses had widened at its full-year results and it tarnished 0.3p to 1.45p.
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