Recommendations » UK
Paddy Power (LON:PAP) report:1H Results
By Daniel Stewart & Co
- Solid set of 1H results this morning, ahead of expectations. Total gross win ?206m, ~12% ahead of expectations (?184m) and 53% ahead of 1H09 in CCY. EPS 82.2c vs 74.5c ~10% ahead of expectations and 30% ahead of 1H09 (62.6c). Strong performance from world cup as expected contributed ?18m to gross win.
- Substantial increase in online business up 117% to ?112m (?61m) and operating profits in online were up 66% to ?36.1m and make up 73% of group profits. UK retail saw 6x increase in l-f-l EBITDA per shop in Britain up 27%. 22 shops opened year to date.
- We applaud the increase in interim dividend to 25c (up 28%). Balance sheet in good shape with ?110m of net cash which gives PAP opportunity to further grow the business.
- The stock trades on 9.8x 2011 EV/EBITDA, a 48% premium to its peers. Although we welcome the strong performance at this point we think there is better value to be found elsewhere in the sector. Partygaming, Playtech and William Hill look attractive on current multiples.
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