Davy Research

Ladbrokes Coral Group plc

Q4 update leaves several questions unanswered; no material change to forecasts for the time being
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Ladbrokes Coral Group plc

DAVY VIEW

The headline from Ladbrokes Coral’s Q4 trading update on February 9th was positive; 2017 group revenues came in in line with expectations, while operating profit was said to be at the top end of management’s expectations. But the statement raised questions. Principally, what is going on with underlying staking across the business? Very strong gross win margins in Q4 led to reduced customer recycling and as always, the challenge is figuring out how much any staking weakness was due to recycling and how much was underlying? No detailed numbers were provided on either margins or staking and, therefore, it is practically impossible to make that assessment at this point. As a result, we are inclined to leave forecasts broadly unchanged for the time being. We think investors should remain mindful of management’s previous guidance that OTC stakes are likely to drop circa 5% per annum. Current consensus doesn’t capture such declines.

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  • RATINGS AND PRICE CORRECT AT TIME OF ISSUE


  • Ladbrokes Coral Group plc

    Closing Price: 16070p

  • RATING 18/04/17

  • PREVIOUS RATING 28/07/15

    Neutral

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