Stocks Tracker: Return of results season as revenue growth counts for little

Kindred Group

1 July closing: SEK137.20

30 July closing: SEK141.05

Peak July closing: SEK151

 Despite posting record financial results in Q2 2021, Stockholm-listed Kindred Group’s share price slipped significantly as July fizzled out compared to the relative surge in share price at the start of the month.

Kindred recorded £363.7m in Q2 revenue following an annual rise of 55% driven by record sports betting activity thanks to Euro 2020. The operator also posted £114.3m in EBITDA and post-tax profit tripled to £87.1m.

However, the operator’s share price slipped by 6% in early trading on Friday 23 July from a previous close of SEK149.85, with Kindred closing out the fourth week of July at SEK145.30.

The month started positively for the group after acquiring the remaining 66.6% of outstanding shares in B2B supplier Relax Gaming in a £253.4m deal on Friday 2 July.

The market responded positively to the M&A effort, with the share price closing out at SEK145.75, up from its previous close on Thursday 1 July of SEK137.20.

Kindred did also suffer from a mid-month slump from the week commencing Monday 12 July as its share price continued to slide throughout the week. Starting at SEK146.85, consecutive days of share price slippage left the operator at SEK142.60 on Friday 16 July.

Entain

1 July closing: 1,780.50p

30 July closing: 1,816.50p

Peak July closing: 1,872p

It was a month of ups and downs for Entain as a positive Q2 trading update, along with words of caution from CFO Rob Wood on future performance, applied some friction to the operator’s share price projection.

The London-listed group posted double-digit online growth for the 22nd consecutive quarter, climbing by 23% on a constant currency basis on Thursday 8 July.

Online sports betting NGR rose by 62%, after a limited sporting calendar last year due to Covid-19, while gaming NGR came in flat at 1% against a tough comparative pandemic period.

The market responded positively to Entain’s update with its share price closing out at 1,820.50p on Thursday 8 July, up from 1,807.50p on Wednesday 7 July. Entain’s share price jumped again before the weekend, hitting 1,870p on Friday 9 July.

After a steady few trading days in the heady heights, including a monthly share price peak of 1,872p on Wednesday 14 July, the stock took a dramatic fall.

By Tuesday 20 July, less than a week on from its monthly high, Entain bottomed out at 1,746.50p. The slump came following the news the operator had announced the pricing and allocation of a $1.3bn First Lien Term Loan B scheduled to mature on 29 March 2027, which would provide the firm with £250m to support corporate development and a potential acquisition drive. Meanwhile, speculation on 4 August that MGM could be about to make another run at its JV partner triggered an 8% surge in Entain’s share price.

Betsson Group

1 July closing: SEK70.90

30 July closing: SEK69.30

Peak July closing: SEK76.40

 Betsson’s shares slipped similarly to Kindred’s following a positive set of Q2 financials.

After reporting a 14% year-on-year increase in revenue to €171.2m on Thursday 22 July, with the operator’s casino segment making up 70% of that total, the group’s share price slipped from SEK72.30 to SEK69.50 on Friday 23 July.

Earlier in the month, the operator announced it was pulling it poker offering out of Germany entirely following the implementation of the new 5.3% turnover in the country.

In an email to the group’s affiliate partners, Betsson said: “Unfortunately, we have to inform you of the closure of our poker product in the German market due to the new turnover tax of 5.3%. We will review the viability of offering poker to our German customers in the future.”

The market responded positively to the decision, with the following week Betsson’s shares hitting a monthly high of SEK76.40 on Thursday 8 July.

Tabcorp

1 July closing: A$5.18

30 July closing: $4.95

Peak July closing: A$5.20

 Tabcorp called off the potential sale of its highly coveted wagering and media business on Monday 5 July which saw the Australian firm’s share price slip significantly.

Following the announcement, Tabcorp dropped from its Friday 2 July close of A$5.20 to A$4.97 on Monday 5 July. The group’s share price continued to fall through to Monday 16 July, bottoming out at A$4.74, before recovering slightly for the remainder of the month.

Entain and Apollo Global Management had both launched multi-billion-dollar bids for the business, but Tabcorp elected to push ahead with a strategy of splitting up its core operating divisions.

Tabcorp noted it would demerge its lottery and keno segment from the wagering and media division to create two separate ASX-listed businesses, with the process expected to be completed by the end of June 2022.

Steven Gregg, Tabcorp chair, said: “The two businesses are expected to be leaders in their respective markets creating great experiences for millions of customers.

“They will build on their heritage of sharing the benefits of their commercial success with governments, the racing industry, licensed venues, newsagents and other retail and business partners,” he added.

Playtech

1 July closing: 434.40p

30 July closing: 370p

Peak July closing: 449.60p

 Playtech’s stock posted a month of steady decline as the ongoing saga of its Finalto subsidiary sale rumbles on.

The supplier looks set to greenlight the sale of the financial division to original bidders Barinboim Group in a $210m deal after Gopher Investments had thrown a spanner in the works after launching a public bid of $250m.

Gopher, which holds a 4.97% position in Playtech, urged the firm to postpone the general meeting in which shareholders were set to vote on the sale to Barinboim Group.

Throughout the played-out drama, Playtech’s share price slumped by 17% since Gopher made its intentions clear, with the Barinboim Group slamming the firm in a public statement.

The consortium said: “Shareholders should ask why Gopher continues to hide and should also be suspicious of Gopher’s credibility, particularly given that disclosure is crucial when buying a highly regulated business,” said the consortium.

“Furthermore, the firm associated with Gopher, TT Bond Partners, is a small boutique brokerage that raises money from Chinese investors. Gopher’s behaviour has not been well received by the market.”

Elsewhere, Playtech said strong performances from its Caliente and Snaitech brands helped H1 trading to perform in line with expectations.