Although Collins Stewart has trimmed forecasts for AsianLogic Ltd. on Monday’s profits warning, Sportingbet’s house broker, Daniel Stewart & Co., has projected strong sequential momentum in sports betting on the eve of first-quarter results.
Paul Leyland of Collins Stewart is projecting adjusted profits before tax of $7.1 million after AsianLogic, which operates land-based and Internet gambling services, announced it would significantly scale back its credit betting business.
“AsianLogic’s wholesale casino business has been suffering from greater competition since Q2 2008E,” Mr. Leyland said in a note to clients. “These pressures have increased and been exacerbated by the economic slowdown.”
Mr. Leyland’s forecast calls for yearend sales of $91.7 million, up 68 percent against last year with pre-tax profits falling 15 percent from $8.4 million.
Reiterating the view of Chief Executive Thomas A. Hall, Mr. Leyland said that while AsianLogic’s business-to-consumer model will operate on a higher margin going forward, “it is unlikely that this business will gain sufficient scale to mitigate the lost wholesale contribution in the short term.”
Full-yearly projections for the 2009 fiscal year call for sales of $40 million with an uptick in pre-tax profits to $9.4 million.
In the first half of 2009, Mr. Leyland expects revenue from AsianLogic’s Chinese investments -- presumably, from a casual gaming portal in which it holds a majority stake -- to begin contributing as revenue from its global gaming investment fund is also expected to ramp up.
With a market capitalization of £38 million, AsianLogic is trading below cash, and Mr. Leyland has given shares, trading at 37 pence, a target price of 90 pence.
Sportingbet, meanwhile, is expected to generate first-quarter gross win of £38.6 million, up 27.1 percent over last year and 11.2 percent, sequentially, according to James Hollins of Daniel Stewart.
“The top-line growth is estimated to be driven by the sportsbook (Europe +30.4%, Australia +38.0%) and casino (+37.5%) divisions, with poker remaining weak in a competitive market (-8.7% YoY, -2.3% QoQ vs Q4 2008),” Mr. Hollins said in a note.
He has projected European sports book gross win of £19.4 million, £4.8 from the Australian sports book, £10.6 million from casino and £4.2 million from poker.
“With costs expected to be broadly flat on Q4 2008, we are forecasting a group EBITA margin of 14.6%, reflecting growth of 80 basis points on Q1 2008 (13.8%),” Mr. Hollins said.
Mr. Hollins has a 76 pence price target on Sportingbet's shares, which are currently trading at 26 pence.
is the editor of IGamingNews. He lives in St. Louis, Mo.