EBET Limited ("EBT")

[steve fleming]

Currently undertaking a 1 for 15 consolidation and at 96c today.

Market cap=$15m
EV=$20m
FY12 EBITDA approx $6m
so less than 4x trailing EBITDA and 7x trailing NPAT.

The good thing is the growth that EBT is beginning to demonstrate and the opportunities available to drive some serious increases at the top and bottom line, and therefore a big re-rate of the shareprice.

There is not a lot IMO of good value opportunities sub $15m now, but EBT is one of them.

Good story on the new chairman of EBT:

MERCEDES RUEHL
When Paul Oneile left the chief executive’s role at Aristocrat Leisure
in 2008, he always thought that would be the end of his working life.

That is, until gaming systems provider eBet approached him six months
ago to come on board as non-executive chairman. “I gave it a lot of
thought, had a close look at the company, and said ‘yes, I’m up for
the challenge’,” Mr Oneile says.

It comes at a time of sweeping regulatory changes for the gaming
industry and the opening up of previously difficult markets.

Victoria and Queensland are two places that both Oneile and chief
executive Tony Toohey are looking at for opportunities.

Oneile spent five years at the helm of Aristocrat Leisure from 2003 to
2008 where he devoted a lot of his energy putting out fires during a
difficult time for the company.

eBet, he says, presents a very positive growth story. “The first thing
was its financial position. Second, and more importantly, was itslonger-term strategy,” he said.

This is something that is now a lot more tangible, with the Victorian
government replacing the Tatts and Tabcorp gaming machine duopoly with
licences that are now held with pubs or clubs directly.

eBet targets those venues to use their products, meaning there is more
opportunity for the company to increase its market share.

Merrill Lynch gaming analyst Mark Bryan says that in simple terms, it
means pubs and clubs have more choice in what goes onto the slot
floor.

But there is also opportunity brewing in Queensland with the new
Liberal National government, Mr Oneile and Mr Toohey believe.
Queensland is the backyard of Odyssey Gaming, which eBet acquired in
June 2011 for $2.3 million. Odyssey is one of only two License Machine
Operators in Queensland, which helps eBet tap the second-largest
market gaming machine market in Australia.

Mr Toohey expects that with a $4 billion budget hole, Campbell
Newman’s government will be looking to expand its revenue base. eBet
posted a 30 per cent rise in earnings before interest, tax,
amortisation and depreciation to $5.7 million for the 2012 financial
year, with total revenues surging 26 per cent to $41.4 million.

[Corporate]

Wish I could buy some but it is very illiquid

[percy]

I read the annual report and was concerned that current liabilities far exceded current assets.
Anyone share my concern?

[steve fleming]

I read the annual report and was concerned that current liabilities far exceded current assets.
Anyone share my concern?
Hi Percy,
Most of EBTs borrowings are included in current liabilities which inflated the current liabilities number.

Given its profitability, CF positive and low debt levels, there is no reason why these facilities won't be rolled over/term extended and therefore moved out of currrent into non-current.

[steve fleming]

Wish I could buy some but it is very illiquid


Only illiquid at the moment as it is trading on a deferred basis as it undertakes its consolidation.

On Monday / Tuesday (pre consolidation) turnover was 1 mil plus each day

[percy]

Hi Percy,
Most of EBTs borrowings are included in current liabilities which inflated the current liabilities number.

Given its profitability, CF positive and low debt levels, there is no reason why these facilities won't be rolled over/term extended and therefore moved out of currrent into non-current.

Thanks for your reply.Certainly looks as though there have great prospects.

[winner69]

Percy ..... I am disappointed in you thinking of getting into a business that facilitates (provides the infrastructure) the wagering and gaming industry

Just think of the untold misery that comes as a result of punters losing zillions ....think of those poor kids who starve cause mum has lost al the benefit gambling ....and so on

I thought you were more highly principled than this ..... No Percy don't support the gaming industry ..please

[ratkin]

Percy ..... I am disappointed in you thinking of getting into a business that facilitates (provides the infrastructure) the wagering and gaming industry

Just think of the untold misery that comes as a result of punters losing zillions ....think of those poor kids who starve cause mum has lost al the benefit gambling ....and so on

I thought you were more highly principled than this ..... No Percy don't support the gaming industry ..please

Hopefully they will lose all their money and go to Cash converters for a short term loan at 350% annual interest :D

[percy]

Yes you are right winner69.
Stayed away from gaming industry,guns and cigarettes etc for a long long time.Done well not investing in the these types of businesses.
Went along to hear Mark Waller of Ebos talking at a presentation.Also talking was Alister Ryan,at the time CFO of Sky City casino.
Ryan impressed me and after a bit of thought I brought some SKC.
I worked in a book shop that sold Lotto.Thought it was a bit of fun.Then instant kiwi scratchies came along and was shocked to see the money wasted.I do not go into hotels very often,and when I do, do not like seeing people on the pokie machines.
On thinking back I stayed out of Aristocrat leisure when my friends were buying them.
May just leave EBT on watch list.Just looking for the next MNF.
Thanks for the wake up call.!

[percy]

Hopefully they will lose all their money and go to Cash converters for a short term loan at 350% annual interest :D

They will and they do.
Please don't let winner69 know I brought some CCV.

[percy]

ALL (Aristocrat) was an eleven bagger for me, I never mix morals and money :-)

Personally I hate those pokie machines, but if fools and their money are to be parted, they might as well give it to me.

My resolve would go out the door with an eleven bagger too !!!
In fact I think I would loose most of my morals to a 2 or 3 bagger!!!
Good on you KW for being practical,..... and wise. lol.

[percy]

Well I mucked about.Decided to buy a small parcel at $1.01.Missed out, they went at $1.03.Then trading halt,as they sold US on line gaming.Ended up paying $1.26 today.

[steve fleming]

Another small cap bouncing around all over the place, can't work out what it wants to do.

1.35 to 1.80, then back to 1.50......

[Joshuatree]

Mkt getting severe, flighty.Hey Steve please clear your mailbox it is full cheers JT

[steve fleming]

Mkt getting severe, flighty.Hey Steve please clear your mailbox it is full cheers JT

Yep, hopefully got it out of its system today.

Should be room now.

[percy]

Market liked today's result.Up 8.7% or 13.5cents to $168.5 cents.

[steve fleming]

I wonder if this evening's Eureka Report write-up will give EBT a lift tomorrow?

-------------------------------------------------------------------------------------------

The small cap with the biggest earnings upgrade




BRENDON LAU (http://www.eurekareport.com.au/contributor/brendon-lau)26 JUNE 2013

It’s easy to be blinded by the onslaught of profit warnings and earnings downgrades in this market, but there are a handful of small caps that are bucking the trend.
You’ll miss them if you blink. Around a quarter of the emerging stocks in the Uncapped 100 actually received a 2013-14 earnings upgrade from analysts in the past four weeks.
While most of the upward adjustments are not material to the value of the stock, the one that stands out in my mind is eBet (EBT).


News that the gaming systems company has finally received regulatory approval for its WMS poker machines in New South Wales and the Australian Capital Territory was one of the triggers for the 37% earnings per share (EPS) upgrade in the consensus forecast to 17.8 cents for 2013-14.
eBet has an exclusive contract with US-listed WMS to distribute WMS’ electronic gaming machines in ACT, Northern Territory, South Australia, Western Australia and NSW – with the latter being Australia’s largest pokies market.
WMS machines are more engaging than the typical machines and trials done at some local RSL clubs have shown that punters spend 30% more on a WMS machine than the floor average, according to eBet’s chief executive, Tony Toohey.


The upgrade is the biggest among stocks in the Uncapped 100 in the past four months and is something investors should get excited about.


While eBet’s total normalised revenue for the six months to end December increased 8% to $21.4 million, sales of gaming machines tumbled 28% to $4 million because the WMS machines had not yet passed the national gaming standards.
Now that eBet can start placing the machines in NSW and the ACT, it should bolster confidence of its ability to post its fourth consecutive year of revenue growth in 2012-13.
“The full annualised benefit [of the WMS machines] we think will go back to what we made in FY12 [in machine sales],” said Toohey. Machine sales that year hit $11 million.
“The other thing is we now have 55% of our business that is recurring through licensing and servicing contracts. The more we expand our systems footprint, the more recurring revenue we get.”
I suspect we will see another round of earnings upgrades flow through, particularly for 2012-13. Analysts are tipping eBet’s EPS to surge by a third this financial year to around 12 cents as total sales climb 3.4% to $42.2 million.
However, this suggests that eBet will produce similar sales and profit figures in the second half to its first half.


eBet has traditionally recorded stronger second-half results due to the nature of its business, and this year should be no different with a likely 40%/60% split between the two periods.
But even without further upgrades, and despite the fact that the stock has run up 68% over the past year, it is looking attractively priced on a one-year forward price-earnings (P/E) that is a little over six times.

While there are no real direct comparisons on the Australian market for the tiny $17 million market cap company, I believe fair value is closer to 10 times. This implies a further 60% plus upside to its share price.


What also strikes me about eBet is that it appears to be the small cap stock for the times. Professional small cap investors are shunning anything related to the mining industry but are keen to look at stocks with a transparent earnings outlook, good growth prospects and that are operating in a relatively stable industry.


eBet checks most of these boxes, and its 33% correction since hitting a five-year high of $1.70 in February represents a good entry point.


On the downside, the market minnow is operating in an industry filled with giants, and my bullish outlook on eBet depends on the company being able to gain significant market share of poker machines with the WMS offering.
We may have to wait a year or so to see concrete proof of that.

Read more at Eureka Report: http://www.eurekareport.com.au/article/2013/6/26/small-caps/small-cap-biggest-earnings-upgrade#ixzz2XOXMrbJw

[percy]

Article worked.SP up 21.5cents [18.9%] today.

[steve fleming]

Reasonably strong 2nd half as expected. NPBT of $1.6m vs $1.2m in H1.

Positive story to tell: “A number of factors have contributed to our continued growth. These include ongoing strength in System sales revenue in NSW and Queensland, continued demand for eBET’s CARD ITTM technology, and growth in annuity revenue”

Just as importantly, its profile is starting to increase.

Micro-equities has become a substantial shareholder. A number of brokers are now covering the stock.

Even starting to get some mentions on YMYC, with TMS Capital recommending it as a spec buy.

[percy]

Am I allowed a "we are well positioned.?"

[steve fleming]

Am I allowed a "we are well positioned.?"

I think you are Percy!

There are some $2 plus broker targets floating around for EBT.

Might even be a dividend on the horizon too!

[percy]

I think you are Percy!

There are some $2 plus broker targets floating around for EBT.

Might even be a dividend on the horizon too!

Well I am very happy to be at $2.
$2 plus,and a divie? Bring it on.!!! lol.

[percy]

Well Steve Fleming you have done it again.
On today's profit announcement the share price was up 47cents [25.7%] to finish the day at $2.30.
You were on the money again with a divie.3.5cents per share.
The outlook was very positive too.
Steve,thank you.

[percy]

Last sale today was $2.50.
Small buyer at $2.58 and a seller at $2.68.

[soulman]

Well done fellows. These kind of rides are fun. I did what you did Percy (bought at $2.00) but unfortunately for me, I saw the price dipped to $1.83 and put a sell at $2.00. The rest of the story is a pain the ass.

[percy]

Well done fellows. These kind of rides are fun. I did what you did Percy (bought at $2.00) but unfortunately for me, I saw the price dipped to $1.83 and put a sell at $2.00. The rest of the story is a pain the ass.

I tried to buy at $1.01cents mid December 2012.There was a seller at $1.03cents,but I was too mean to pay that.Then they went into a trading halt as they sold off US interests.Saw how much they got for them and paid $1.26 for mine on 21/12/2012.

[steve fleming]

Interesting thoughts on today's announcement:

http://www.eurekareport.com.au/article/2013/9/12/live-markets/ebet-surges-qld-hopes


News that gaming systems company eBet (EBT) is starting a trial of its technology in Queensland has sent the stock surging today.

The stock gained 8.1% to $2.40 this afternoon, making it the best performer on the Uncapped 100 (http://www.eurekareport.com.au/article/2013/6/5/small-caps/introducing-uncapped-100).

While the trial may not sound particularly exciting to most investors, it can prove to be a very significant revenue driver for eBet.

The company secured approval from the Queensland Office of Liquor and Gaming Regulation to test its CARD IT system at the Prince Alfred Hotel.
CARD IT is touted as the “next generation” ticket-in ticket-out (TITO) product that is backward compatible with older generation pokies machines that still dominate the market with around a 90% share.
TITO solutions allow punters to use a stored value card to gamble and give players the flexibility to transfer credits between machines and collect winnings without the assistance of an attended.
CARD IT is being used in New South Wales and has so far generated $5.9 million in turnover since its introduction 18 months ago.

eBet could make close to that amount over the same time frame for Queensland if state regulators are satisfied with the current trial, which is expected to last three to four weeks.

If that comes to pass, revenue from CARD IT in that state would be material to group revenue given that the company posted total sales of $43.5 million in 2012-13. What’s more, revenue from CARD IT is recurring.

There are further synergies from a successful introduction of CARD IT in Queensland. eBet could steal market share for the general maintenance, monitoring and management of pokies machines from rival Max Gaming.

“Most of the big gaming venues are waiting – they are only on a month-to-month contract with Max Gaming because they are not prepared to go another three years with Max Gaming,” says eBet’s marketing manager, Nicole Thomas. “This is a very positive sign for eBet.”

Max Gaming does not have its own TITO solution and Thomas estimates that it would take the rival anywhere from one to three years to bring a rival CARD IT product to the market. eBet holds 20% of the pokies monitoring and management market in Queensland.
eBet has more than doubled in price since Eureka Report highlighted its strong growth attributes at the end of June (http://www.eurekareport.com.au/article/2013/6/26/small-caps/small-cap-biggest-earnings-upgrade).

[percy]

steve;
thank you for posting that.

[steve fleming]

Hmmm....10% of EBT changed hands today at close to multu-year highs

there can only be one seller (Utilico) but who is the buyer???

[steve fleming]

Another small cap to get the wobbles today, as it plummeted to $2.76 just after open.

i am guessing, but it wouldn't surprise me if Colin Nicholson, who had a lot of followers follow him into EBT, but a stop loss/ sell on it at $3.00 (15% of its $3.50 high).

some real volatility out there in small cap land at the moment,

[steve fleming]

i am guessing, but it wouldn't surprise me if Colin Nicholson, who had a lot of followers follow him into EBT, but a stop loss/ sell on it at $3.00 (15% of its $3.50 high).



http://www.bwts.com.au/index.cfm/whats-new/

Well there we have it - CN (and hopefully all his followers) has now left EBET - "Ebet (EBT) has been removed from the Portfolio Disclosure (http://www.bwts.com.au/index.cfm/portfolio-disclosure/) page"

His entry pretty much signalled the top of EBT, hopefully his exit will be the low point in this cycle

EBT was always far too illiquid for him, and turned out to be a disastrous trade for him, as it was with LCM last month when he was only in it for a week or so before getting stopped out

[mark100]

I jumped in a for a trade at $2.52. Looked like it had fallen too far too fast

[percy]

The agm is in Sydney next Tuesday the 26th.
Maybe a positive update?

[percy]

Nice to see PPT [perpetual] joining CBA on the share register.!

[percy]

Must have been a great meeting.
Speeches were very positive.
SP up 16 cents to $3.10.
Mark100.Great buying at $2.52.
"EBT is well positioned for continued growth,thereby delivering long term shareholder value."

[steve fleming]

Must have been a great meeting.
Speeches were very positive.
SP up 16 cents to $3.10.
Mark100.Great buying at $2.52.
"EBT is well positioned for continued growth,thereby delivering long term shareholder value."

Yes Percy, was very well received.

CardIT has been the key growth driver over the past year or so. Now, with approval to take it into QLD, results in an INSTANT 25% increase to the CARD IT customer base...should provide a nice revenue uplift in the second half of the year

[percy]

Yes Percy, was very well received.

CardIT has been the key growth driver over the past year or so. Now, with approval to take it into QLD, results in an INSTANT 25% increase to the CARD IT customer base...should provide a nice revenue uplift in the second half of the year

Thanks Steve.

[steve fleming]

I find it always good to read over Management's previously stated guidance/plans and see how they are being executed.

In the case of EBT it is very positive, and suggests Management are really on top of their game - no wonder EBT is trading at multi year highs

BI now acquisition completed and profitable
Entry into Victoria completed and initial major client secured
Now waiting on results of TITO trials


Outlook for FY14
Looking forward, Mr. Toohey commented: “Odyssey will continue to grow its
CARDIT™ footprint across Queensland, and will be further assisted by the
forecast approvals for TITO functionality, with TITO trials due to commence in
March.
The Victorian gaming systems market provides a large opportunity which the
Company is currently focusing on.
We are planning to expand our gaming system reporting capabilities to more
sophisticated business intelligence functionality, which will create a new
systems revenue stream.
Our strategy is to continue to grow our core systems business and build long
term relationships with our customers, by providing powerful integrated
gaming solutions.
The continued positive momentum in the business and a strong pipeline of
opportunities should see eBET achieve yet another strong full year result.”

[steve fleming]

As a result of the entry into Victoria, and securing the first Victorian contract, BBY have just increased their target price from $3.20 to $4.20

[percy]

As a result of the entry into Victoria, and securing the first Victorian contract, BBY have just increased their target price from $3.20 to $4.20

Great news.
We are well positioned!!!!

[percy]

Not surprisingly today's www.thebull.com.au is very bullish on EBT.[too].!
You may have to click onto,premium,then feature,then 6 high-tech gaming stocks.

[mark100]

Write up in Eureka report last night