Playtech defiant as Malaysia doubts hit share price
Shares fall 8% as Malaysia embarks on widespread online gambling clampdown but Playtech confident of meeting 2014 consensus
Playtech this afternoon responded to a slide in its share price said to have been triggered by regulatory developments in the Malaysian market.
Shares in the firm fell around 8% today after authorities in Malaysia revealed they had blocked access to some 172 online gambling domains and were to seek more permanent methods to clamp down on online gambling in the country.
However in a statement issued to the market this evening Playtech dismissed speculation that regulation in the country would have a material impact on revenues and insisted its business remained resilient.
“The company is monitoring the position closely and, regardless of the potential impact of any changes in the Malaysian market, remains confident of meeting the latest market consensus, following the recent Q3 IMS, for 2014 and beyond,” the statement read.
Cenkos Securities estimated that Malaysia accounts for circa 10% of total group revenues however the brokerage has reiterated its buy recommendation, and Peel Hunt analyst Nick Batram said the reaction to events in Malaysia had been “overdone” and that Playtech’s position was largely unchanged.
“For those that are comfortable with the risk profile, Playtech remains an attractive opposition,” Batram added.
Numis analyst Ivor Jones said Playtech’s statement intimated that it had a “sufficient cushion” in order to absorb any loss of revenues, backed up by the supplier’s “history of effectively managing market expectations”.
JP Morgan however downgraded its recommendation this morning from ‘neutral’ to ‘overweight’, arguing that its exposure to unregulated markets in Asia had increased and that regulatory issues in the region would make it difficult for the shares to outperform.
Last week the Malaysian government revealed plans to bring its gambling laws up to date and implement stricter controls on online gambling, with new proposals set to be submitted early next year.
Playtech reported a 29% increase in Q3 revenues at its interim management statement last month and expectations for 2014 had been upgraded from 194m to circa 202m.
Shares in the company slightly in morning trading on Friday and stood at circa 655p at the time of writing.