Good morning!

Thanks for the suggestions today, I'll try to cover the three I was originally looking at (32Red (LON:TTR), Share (LON:SHRE) and Cineworld (LON:CINE) ) in addition to the comment requests.

Best regards

Graham




32Red (LON:TTR)

Share price: 194.5p (+0.3%)
No. shares: 85.3m
Market cap: £166m

Final Results

I'll keep this brief as it looks as if this will be delisting shortly.

PBT is up 511% to £6.5 million, and the new year is off to a good start with revenues up 20% in the first nine weeks.

So while the share price is at an all-time high, the forward earnings multiple is not too extraordinary. Brokers are forecasting further significant earnings increases out to 2018, so that the multiple could be reduced to almost as low as ten times PBT within the next few years, if targets are hit!

The Board cites the following factors in its recommendation, in addition to the premium against the prevailing share price:

the Offer representing an attractive valuation when considered against 32Red's historic earnings and prospects; ·      

the relative lack of liquidity in 32Red Shares and the fact that the Offer provides 32Red Shareholders with a certain opportunity to realise their investment in 32Red wholly for cash; and ·     

the level of irrevocable undertakings to accept (or procure the acceptance of) the Offer, representing, in aggregate 71.1 per cent. of the 32Red Shares.

1) seems reasonable, although some bulls might argue that, given the trading momentum and earnings forecasts, the valuation is closer to "fair" than "attractive".

2) is also reasonable, if most shareholders have a preference for liquidity. (I don't  personally care about liquidity very much, although I know that puts me in the minority!)

3) is important, because it means that it's almost certainly going ahead. Kindred Group (formerly known as Unibet) is a strong buyer and so I don't see how the deal could possibly fall through.

So the share price should reflect something which is very close to the risk-free discount rate over the length of time it will take to complete the deal, with just Unibet's credit risk attached to it.

On that basis…

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