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The Expert View: William Hill, Hammerson and Workspace

Our daily roundup of analyst commentary on shares, also including Moneysupermarket and TT Electronics.

by Michelle McGagh on Mar 20, 2018 at 05:00

If you would like to receive news alerts on any of the stocks mentioned in The Expert View, click on the star icons below to add them to your favourites.

Key stats
Market capitalisation£2,879m
No. of shares out859m
No. of shares floating856m
No. of common shareholdersnot stated
No. of employees16168
Trading volume (10 day avg.)5m
Turnover£1,711m
Profit before tax£373m
Earnings per share-9.71p
Cashflow per share0.51p
Cash per share35.73p

William Hill: gambling crackdown not as bad as feared, says Hargreaves

The clampdown on fixed odds betting terminals (FOBTs) by the Gambling Commission has not been as bad as feared for bookmakers like William Hill (WMH), says Hargreaves Lansdown.

The commission has distinguished between two different types of FOBT games; slots and the rest. It advised that non-slot games, including roulette, should have a maximum limit at or below £30 and slot games should have a limit of £2.

Analyst George Salmon said data showed slot games were the most damaging for consumers and it was no surprise the commission slashed the stakes.

‘However, crucially it’s open to a less strict limit of up to £30 on other game types, including roulette – the most popular FOBT game,’ he said.

‘While certainly not the outcome the bookmarkers would have originally hoped for, this is better than what had been feared following January’s news sharp cuts in the stake limits was on the cards,’ he said.

Salmon cited William Hill's takings of £9.5 million a week in gross winnings from machines.

‘The new limits will likely see this fall in the future, but a higher cap on roulette-based games could help protect some of the huge revenues these machines make,’ he said. Shares in William Hill jumped 4.5% to 334.9p yesterday.

Key stats
Market capitalisation£4,321m
No. of shares out794m
No. of shares floating753m
No. of common shareholdersnot stated
No. of employees558
Trading volume (10 day avg.)8m
Turnover£249m
Profit before tax£176m
Earnings per share48.92p
Cashflow per share52.10p
Cash per share25.93p

Hammerson takeover bid puts Intu deal in jeopardy, says Peel Hunt

Property developer Hammerson (HMSO) has rejected a takeover bid from French shopping centre owner Klepierre which is likely to spoil the former’s tie-up with Intu, says Peel Hunt.

Analyst Matthew Saperia retained his ‘hold’ recommendation and target price of 525p on the stock after Klepierre’s bid of 615p per share, which represents a c.41% premium to the closing price on 16 March.

Saperia said the reasons set out by Hammerson for rejecting the offer were also the reasons why the ‘marriage of convenience’ with Intu Properties would not be good for Hammerson.

‘Our 17 January note discussed the potential for third parties to spoil the Hammerson and Intu Properties tie-up, and this is now seemingly playing out,’ he said.

‘Ironically, the response from Hammerson sets out the portfolio’s unique properties – many of which we believe would be diluted by the Intu transaction. With the Hammerson shares up 27% [following the Klepierre bid], and Intu’s broadly flat, the ‘marriage of convenience’ is now looking considerably less likely.’

Key stats
Market capitalisation£1,632m
No. of shares out164m
No. of shares floating118m
No. of common shareholdersnot stated
No. of employees206
Trading volume (10 day avg.)m
Turnover£109m
Profit before tax£66m
Earnings per share53.52p
Cashflow per share54.19p
Cash per share1.65p

Workspace in a strong position, says Liberum

Workspace Group (WKP) has a competitive position in the market due to the office and studio space provider's freehold model and scale, says Liberum.

Analyst David Brockton retained his ‘buy’ recommendation and target price of £11.00 on the stock, which jumped 3% to 999p yesterday.

‘We believe the combination of market growth and latent portfolio potential underpins significant long-term upside for Workspace,’ he said.

‘Flexible workspace is the fastest growing segment in the office market. Workspace’s freehold model, scale and customer service enhance its competitive position serving this market.’

Brockton estimated there was 30% upside to earnings ‘before any further market growth’.

Key stats
Market capitalisation£1,569m
No. of shares out536m
No. of shares floating527m
No. of common shareholdersnot stated
No. of employees631
Trading volume (10 day avg.)3m
Turnover£330m
Profit before tax£125m
Earnings per share14.40p
Cashflow per share18.21p
Cash per share6.56p

Numis upgrades Moneysupermarket despite ‘pause’ this year

Numis has upgraded Moneysupermarket (MONY) despite fears the comparison site may underperform this year as analysts believe it is positioning itself for future growth.

Analyst Gareth Davies upgraded his recommendation from ‘add’ to ‘buy’ with a target price of 390p on the stock after 2017 results came in inline but the outlook for 2018 was ‘disappointing’ with a £5 million shift from capital to operating expenditure and ‘an expectation it will underperform the market’ this year.

‘While frustrating that 2018 in effect sees the group on pause, we feel the re-platforming has positioned the group uniquely to compete for the future, see the benefits of self-help coming through from the second half of 2018 onwards, and expect double-digit earnings per share growth to resume in 2019 against the backdrop of structurally strong end markets,’ he said.

He added that the shares were ‘very attractively valued’ on a free cashflow yield of almost 7%.

The shares fell 1.6% to 291.1p yesterday.

Key stats
Market capitalisation£340m
No. of shares out163m
No. of shares floating159m
No. of common shareholdersnot stated
No. of employees5770
Trading volume (10 day avg.)m
Turnover£360m
Profit before tax£37m
Earnings per share8.39p
Cashflow per share16.12p
Cash per share28.54p

Jefferies: TT Electronics is ‘supercharged’

Engineered electronics provider TT Electronics (TTG) has room for growth as it ‘supercharges’ its strategy, says Jefferies.

Analyst Andy Douglas retained his ‘buy’ recommendation and target price of 255p on the stock after 2017 results that were ahead of expectations ‘across the income statement, with good top/bottom-line organic growth and healthy margin progression’.

Douglas said the company was well positioned going into 2018 ‘with plenty of scope for growth, an existing strategy that is working and is being 'supercharged' in order to fully take advantage of the growth opportunities’.

‘The group’s balance sheet is in extraordinarily good shape,’ he said. ‘The proposed acquisition of Stadium Group should close in the first half of 2018 and there is the desire and bandwidth to do more.’

The shares fell 4.4% to 207.5p yesterday.

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  • Hammerson PLC (HMSO.L)
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  • Moneysupermarket.Com Group PLC (MONY.L)
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  • TT electronics PLC (TTG.L)
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  • William Hill PLC (WMH.L)
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  • Workspace Group PLC (WKP.L)
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