Friday tips round-up: Ladbrokes, CSR, Centamin

22nd Feb 2013 07:09

Pre-tax profit grew 49.1 per cent to 200.7m pounds in the 12 months to December 31st at Ladbrokes, as the chain's betting shops - of which there are almost 2,200 in the UK - continued to draw in punters. The bookie yesterday declared a final dividend of 4.6p a share, taking the full-year pay-out to shareholders to 8.9p, up 14.1 per cent. With the long-awaited launch of the new website just around the corner and a lot of football results still going the bookies' way in January, there is plenty of cause for optimism. Ivor Jones, an analyst at Numis, points out that with net debt - which stood at 386.9m pounds at the end of the year, down 67m pounds - now at 1.5 times earnings before interest, taxes, depreciation and amortisation, Ladbrokes is in a position to "at least" carry on raising the dividend. That said, there are headwinds blowing the way of UK bookmakers. The Government earlier this month introduced a 20 per cent tax on profits from gaming machines and Ladbrokes has also reported signs the machines market "is becoming more competitive." While Mr Glynn is optimistic on the digital business, he also includes the caveat that there is "much still to do" in order to transform that division. Ladbrokes's shares, which trade on a current price-to-earnings multiple of 13, are at a discount to its rival William Hill. However, Questor doesn't yet feel confident enough to shorten the odds and upgrade to buy. Hold, Questor says.CSR yesterday released higher than expected numbers, and the decision to return $50m to investors by means of a share buyback sent the shares racing ahead by 47¼p to 432¾p. The chip maker also put out a forecast for first-quarter revenues of $215m to $235m, again ahead of expectations. All of the above is in large part the result of the recent restructuring of the firm the effects of which are not yet all in the figures. Analysts expect to see another large rise in operating profits this year to just under $100m. The question now is what CSR does with its strong cash-flow. The last big deal, the $233m purchase of Zoran, was in mid-2011, and though there is probably the odd technology concern the company would not mind picking up, there is no sign of another such on the horizon. Since it started buying back shares in 2010, the company has returned $416.4m before the latest exercise. Yet it had $333m in the bank at the year end. CSR says it will review the situation once the latest buyback is completed. The reckoning must be that more will be returned. The shares have had a good run; on about 15 times earnings they look like good long-term value, but no reason to chase for now. Buy on the (inevitable) weakness, says The Times's Tempus. Centamin is seen as a one-asset company, a mine in the eastern desert of Egypt that has suffered various upsets over the past few months, including a couple of strikes, some mechanical problems and a court case that questions its right to operate there under an Egyptian government license. The chances are that the court case will be settled in its favour because it is not in the authorities' interest to discourage foreign investors. But if ever a company needed a diversification strategy it is Centamin. The outfit also has four licenses to explore for gold in neighbouring Ethiopia, but these are at an early stage. It is taking part in a cash raising by the AIM-quoted Nyota Minerals, with more developed assets in that country, which will raise its holding to nearly 20 per cent. In due course these assets will need more capital, and Centamin is in a good position to take a more active part. But it does not look like a game changer at this stage. The shares are still a punt and should be approached with caution, Tempus writes. Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.AB