11th May 2016
William Hill net revenues slipped 3% dragged down by 11% slump in online revenue, but the Share Centre continues to recommend it as a ‘buy’ for higher risk investors
Investment research analyst Ian Forrest, investment research analyst says: “In a trading update released this morning, William Hill said that its gross win margin, the amount it has won and its customers have lost, had benefitted from English Premier League results, despite odds on Leicester City winning the title of 5000-1.
“Investors should acknowledge however, that net revenues slipped 3%, with the group taking a hit from punters cashing out over Cheltenham festival and unfavourable European football results.
“It was not all doom and gloom as the group stated that it was maintaining its full year profit guidance of between £260m and £280m. In addition, online betting in core markets continue to grow, albeit at a slower pace than William Hill had anticipated. It is also worth noting that positive trends in William Hill’s overseas operations remain strong and growing.
“We continue to recommend William Hill as a ‘buy’ due to the growth in its international operations, which provides diversification and expands its services to appeal to a wider demographic. However, poor results from the online business and increasing competition make this stock suitable for higher risk investors.”
But Hargreaves Lansdown says William Hill should be concerned about the government’s increasing concern with problem gamblers.
Steve Clayton, Head of Equity Research Hargreaves Lansdown says: “Regulation is increasingly moving towards placing more onus on the bookies themselves to identify problem gamblers and promote self-exclusion schemes. In the fourth quarter of last year, for example, the Gambling Commission introduced new rules to make it easier for online players to self-exclude. Previously, players would have had to contact a call centre to self-exclude but the new system provides an online prompt to do this.
“The challenge for William Hill is to reduce reliance on problem gamblers and recruit more “recreational” clients. These are punters who don’t take it seriously enough to really know what they are playing at, and can therefore be relied upon to bet money at poor odds, in return for a bit of a thrill. Recent trading suggests there is still some way to go on this front.’