Is it now a good time to have a gamble with The Rank Group (LON:RNK) – I think it is a fair bet.

Tomorrow morning the company, which is a leading international gaming, leisure, and entertainment group offering exciting and entertaining customer experiences, in venues or online.

The group’s mission appears to be ‘excite and to entertain’.

Ahead of tomorrow’s AGM Trading Update could buyers of the shares get excited and will they be entertained by seeing the group’s shares react positively.

The Business

To briefly describe the company, it has some 112 casino and bingo venues regularly entertaining its 3.1m active customers, who also use its 80 plus digital brands covering casino, bingo, slots and sports betting.

Grosvenor Casinos is Rank’s casino-led brand that focuses on table and machine gaming, with 51 venues, it is the UK’s largest casino operator.

Mecca is the group’s very well-known bingo brand, its community-based gaming operates in 52 venues, making it the UK’s second largest bingo operation.

Over in Spain, the group has a strong presence with another community-based bingo brand, Enracha, that is currently operating through nine venues.

The group has a strong three-year programme of growth initiatives in place for each of its businesses focused on: cash maximisation in land-based bingo; recovery and growth in the Grosvenor venues business; scaling the digital business both in the UK and internationally and maximising the opportunities of the anticipated land-based legislative reforms for the UK’s casino and bingo sectors.

Management Comment On The Recent Results

CEO John O’Reilly stated that:

“This has been a year of strong financial, operational and strategic progress for Rank. We are continuing to rebuild profitability following the impact of lockdowns and the material inflationary pressures experienced in recent years. Trading continues to improve due to ongoing investment in our people, our products and the facilities within our venues businesses, and the continued development of the proprietary technology which is driving the growth of our digital business.

With some important developments within our proprietary technology now in place, we are increasingly delivering a seamless and tailored cross-channel experience for our customers, leveraging our key area of competitive advantage.

We are well-positioned to take advantage of the much needed land-based reforms which will help to further modernise our casino and bingo propositions to better meet the expectations of today’s customers and we look forward to the Government confirming the timetable for the required secondary legislation.  

We have started the new financial year as we finished the previous one, with good momentum across all businesses. With inflation receding, disposable incomes improving, investment continuing to be made in the customer proposition and a strong pipeline of growth initiatives underway, we are confident in the future prospects of the Group.”

In My View

Analysts who follow the group rate the shares as a Buy, with the highest Price Objective for its shares set at 120p compared to the current 86p, at which level the whole group is valued at £400m.

I have seen one analysis suggesting that the fair value for this group’s shares is 136p.

I am impressed that recent ‘insider’ purchases have been sizeable at prices up to nearly 83p a share.

Without any inside knowledge, I take the view that the AGM Trading Update tomorrow morning will be bullish, possibly enough to help to push the group’s shares back over the 100p level.

So, I repeat the question, is this the time to take a gamble with The Rank Group?

Whitbread shares were nicely higher on Wednesday after the hotel and leisure group posted interim results revealing robust demand in Germany but a slightly less positive performance in the UK.

The driving factor for shares on Wednesday was a fresh £100m share buy back and 7% increase in the interim dividend. The group also set out a plan to return £2bn shareholders over the next five years.

Group revenue for the period was flat, largely as a result of soft market conditions in the UK. However, outperformance of the wider market seems to have provided some encouragement for investors as shares rose 3%.

“Premier Inn operator Whitbread continues to outperform the market but that’s not quite enough to shrug off a weaker demand picture. In the UK, both occupancy and room rates were down on last year, with London feeling the pinch a little more than the regions,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

“Overall, revenue per available room (RevPAR) fell 4% to £72. This was offset by continued expansion in the estate. Food and Beverage sales fell 7% reflecting both a 3% decrease in like-for-like sales and planned consolidation of the estate towards a more hotel-based dining offering.”

Analysts highlight how less competition after the pandemic has provided a boost to Whitbread as they cement their market leading position.

“There is no doubt just how much the pandemic hurt Whitbread. As COVID-19 tore through the hospitality sector, hotels and hospitality outlets were forced to adapt in a bid to survive. However, as is often the case in times of crisis, there comes opportunity,” said Mark Crouch, market analyst at investment platform eToro.

“Following the pandemic, Whitbread’s competition has significantly thinned out, allowing the Premier Inn owner to consolidate its position as the UK’s leading hotel chain and further bolster its standing in Germany, where total accommodation sales grew by 22% in the first half of the year.”

Versarien has hit long term investors with another placing raising £450,000 through issuing nearly 1.4 billion new ordinary shares at 0.0325p each.

The heavily discounted placing sent Versarien shares sharply lower, touching all time lows in early trade.

Versarien said the fresh capital will bolster capabilities in several key areas. Firstly, it will enhance the firm’s in-house concrete and mortar testing facilities. Additionally, the funds will support external UKAS accredited testing services for 3D construction printed products. Some of the proceeds are also earmarked for general corporate purposes and working capital.

No matter the allocation of capital, the placing will be a bitter blow for investors after a series of positive updates from the company in recent months.

In August, the company inked its first major 3DCP contract with Building For Humanity CIC for a project in Accrington. Moreover, October saw Versarien embark on a year-long, commercially funded venture with construction giant Balfour Beatty to develop graphene-enhanced 3DCP materials.

These developments underscore the growing traction Versarien is gaining in the construction industry. The company’s potential is further evidenced by its robust pipeline of opportunities, valued at £4.7 million as of early October. This pipeline comprises £1.6 million in commercial prospects and £3.1 million in potential grants.

CAP-XX, a leading manufacturer of thin supercapacitors and energy management systems, has secured a contract with a new customer in South Africa’s smart meter sector.

This 12-month agreement follows a successful design-in project and is expected to generate significant revenue in the fiscal year ending June 2025.

The customer will integrate CAP-XX’s supercapacitors into their smart meters for measuring gas and electricity usage. CAP-XX anticipates this initial contract will lead to future orders as the customer’s needs grow.

This development highlights the expanding role of supercapacitors in the booming global smart meter market. CAP-XX said supercapacitors are increasingly preferred in smart meters due to their high power density, rapid charge-discharge capabilities, and long operational life because they provide crucial backup power during outages, ensuring continuous data transmission and uninterrupted functionality.

CAP-XX shares were around 7% higher at the time of writing.

Armadale Capital (LON: ACP) has rebounded following yesterday’s drop on the announcement of the proposed cancellation of the AIM quotation. The board believes that being a public company does not benefit the company because of the costs and lack of ability to raise money. Armadale Capital needs to reduce the cash burn and sell non-core assets. The resources company can be more flexible as a private company. The share price doubled to 0.08p.  

Strategic Minerals (LON: SML) generated revenues of $1.27m from the Cobre tailings project in September. This is treble the level last September. Full year revenues should be more than $4.5m. The remaining loan facilities have been repaid. The share price improved 13.6% to 0.25p.

Audioboom (LON: BOOM) grew third quarter revenues by one-third to $18.8mand full year EBITDA of more than $1m is now expected. September generated record revenues. The share price rose 7.14% to 225p.

Tatton Asset Management (LON: TAM) had stronger than expected net inflows averaging £305m/month in the past six months. Assets under management or influence are £19.9bn. The share price increased 7.08% to 711p.

Semiconductor designer EnSilica (LON: ENSI) has won a design and supply contract for a controller ASIC for automotive and industrial markets. The value should be more than $31m over seven years. The share price is 6.38% higher at 50p.

FALLERS

Technology investment company Tern (LON: TERN) is raising £625,000 at 1.25p/share. This cash will be investe4d in investee companies and cover working capital outflows. The share price slumped 42.3% to 1.275p.

Deltic Energy (LON: DELT) chief executive Graham Swindells has left the board and chief operating officer Andrew Nunn will replace him. The share price fell 23.8% to 4p.

PHSC (LON: PHSC) chair and chief executive Stephen King is stepping down in January. He has a 19.1% stake. A new chief executive is being sought. The share price dropped 6.45% to 29p.

Floorcoverings supplier Victoria (LON: VCP) says the market continues to be soft and EBITDA is likely to decline to £50m in the first half. Second half trading should be stronger. The share price declined 4.86% to 121.6p.

The FTSE 100 was weaker on Tuesday as commodity companies dragged the index lower despite a rally in UK-centric stocks on interest rate hopes.

London’s leading index was down 0.4% at the time of writing on Tuesday with oil majors shaving off a considerable number of points from the index. BP was the top faller, plunging over 4%, and Shell sank over 2%.

The catalyst was falling oil prices – Brent and WTI were both down more than 5% in midmorning trade in London.

“With the crude price failing to bounce through Asia, consolidation was the play, where we saw a tight range for much of trade, however, we’re now seeing sellers regain composure with price breaking through the US lows, with a mix of stops being taken out, and momentum-focused traders working in line with the flows,” said Chris Weston, Head of Research at Pepperstone.

“The demand side of the equation also seems to be in play with OPEC projecting weaker demand forecasts.”

Although the index was firmly in the red on Tuesday due to oil and mining shares, there was considerable positivity emanating from companies focused on the UK economy.

Hopes of lower interest rates provided support for house builders with Persimmon, Barratt Redrow and Taylor Wimpey all up more than 2%.

“Domestic-focused UK stocks were in the spotlight as the latest economic data strengthens the argument for a drop in the cost of borrowing,” says Russ Mould, investment director at AJ Bell.

“The Bank of England is carefully engineering a soft landing as the UK economy loses momentum. A decline in the unemployment rate suggests the labour market isn’t in trouble, yet lacklustre GDP figures for July and August, combined with a slowdown in the rate of pay growth, means a small interest rate cut might be warranted to help grease the wheels and get the country moving a little bit more.

“Markets are now pricing in an 83.5% chance of a quarter percentage point rate cut when the Bank of England’s monetary policy committee meets next month. Shares in housebuilders, banks and supermarkets responded favourably to the latest economic data and how it could lead to a rate cut, but not every consumer-facing stock got a bounce. Retailers Next and Currys were in the red which suggests some caution on behalf of investors, namely that another rate cut isn’t a guaranteed ticket to consumers splashing more cash.”

Easyjet was the top riser after Goldman Sachs after bumped their price target up to 600p.

The Cambridge-based 1Spatial (LON:SPA) yesterday announced its Interim Results for the six months to end-July. 

The £74.5m capitalised group, which is a global leader in Location Master Data Management software and solutions, reported a 5% increase in its first-half revenues to £16.2m (£15.5m) and an encouraging 60% fall in its pre-tax losses to £0.2m (£0.5m loss). 

The company, which not only has operations in the UK but also in Ireland, the USA, France, Belgium, Tunisia, and Australia, provides its LMDM software, solutions and business applications, primarily to the Government, Utilities and Transport sectors via the 1Spatial platform and its SaaS offerings.  

Its solutions ensure data governance, facilitating the efficient, effective and sustainable operation of customers around the world. It allows them to master their data on any device, anywhere, anytime and can be deployed as SaaS in the cloud, on-premise, or as a hybrid of both.  

The group’s global clients include national mapping and land management agencies, utility companies, transportation organisations, government and defence departments. 

Management Comment 

CEO Claire Milverton stated that: 

“We have enjoyed a positive first half of the year, successfully executing on our key strategic initiatives.  

Notable achievements include the timely deployment of 1Streetworks within UK Power Networks, strategic expansion into new US states and sectors and strategic hires to set the business up for further growth.  

Looking forward, our primary focus will be on accelerating the momentum of our SaaS offerings, converting our expanding pipeline and further penetrating the substantial US market.  

The notification of the award of a second major 1Streetworks deal for £1m (subject to contract), coupled with a growing NG9-1-1 pipeline, reinforces our confidence in continued progress throughout the remainder of the year.” 

Analyst Views 

At Panmure Liberum, its analysts Andrew Ripper and Harvey Robinson have upped their Buy rating on the group’s shares, looking for 90p (80p). 

They suggest that there is increasing evidence that the group is at an inflection point, especially following the recent contract wins announced by the company. 

They estimate that for the current year to end-January 2025, the group will see an increase in its sales to £37.0m (£32.3m), lifting its pre-tax profits to £2.2m (£2.1m) and its earnings to 1.9p (1.8p) per share. 

For next year they go for £40.0m sales, £3.9m profits and 3.0p per share in earnings. 

Andrew Darley and Michael Hill, at Cavendish Capital Markets, initiating their forecasts, have a punchier share Price Objective of 140p. 

This year they look for £36.1m revenues, and £2.2m adjusted pre-tax profits, but with earnings easing fractionally to 1.7p per share. 

While over at Edison Investment Research, analyst Dan Ridsdale considers that the group’s contract momentum underpins its growth prospects. 

On a discounted cash flow analysis, they indicate 100p a share being readily achievable. 

For the current year, he has estimates of £35.8m sales, £2.4m EBIT, with 1.4p earnings per share. 

Ridsdale goes for £38.7m in revenues in the 2026 year, with £3.8m EBIT, generating 2.6p in earnings per share. 

In My View 

I do like the basis of this group’s offerings both in the UK and globally, with an emphasis upon its potential in the US. 

On the face of it though, its shares, now at 66.50p, appear expensively rated, but as the group builds up its annual recurring revenues, I feel that the profits really will drop to the bottom line quite impressively. 

That gives credence to the Price Objectives put forward by the analysts. 

Finally, it is worth noting that yesterday, after the results announcement, CEO Claire Milverton added another 45,349 shares to her holding in the company, purchased at 66p, taking her stake up to 764,125 shares. 

Victoria Flooring has issued a particularly down beat assessment of the flooring market they operate in highlighting an extended period of decline that has forced them to take cost cutting measures.

The group said in expects EBITDA for the first half to be £50m, significantly lower than the £64.9m recorded in H2 2024.

Falling profitability is the result of slow sales across the industry. Victoria estimates volumes across the entire industry are down 20% – 25%.

To combat falling volumes, the company have implemented measures including streamlining procurement, relocating some manufacturing facilitate, and reorganising production of ceramics. 

Despite macro influences playing a heavy part in first half trade, the company is confident the second half should see signs of improvement driven by increased mortgage approvals and rising transactions.

“The flooring sector is experiencing the most severe and longest decline in demand in the last 30 years. During this period, we have focussed on optimising productivity and reducing operational costs whilst maintaining the same potential production capacity,” said Chief Executive, Philippe Hamers.

“These actions will have a very material positive impact on earnings and cash flow as demand normalises with the anticipated improvement in the macro-economic environment and increase in housing transactions, a key driver of demand. Clearly the recovery continues to draw closer, although it is difficult to pinpoint precisely when it will begin. However, we remain prepared for growth when the time arrives, which will be delivered without any significant capex spend.”

Victoria Flooring shares were down 2% at the time of writing.