ASX Stocks in Wagering and Online Social Gaming amid long tale of the unexpected

  • May 04, 2020 AEST
  • Team Kalkine
ASX Stocks in Wagering and Online Social Gaming amid long tale of the unexpected

Australia has been under lockdown since 22 March 2020 with the restriction on social gathering, travel bans, implementation of social distancing, and practising of personal hygiene. In the past week, the country has witnessed a drop in the COVID-19 cases. There are just around 1,000 cases active in the country. There has been a drop in the infection rate in regions like Western Australia, the ACT, the Northern Territory Queensland & South Australia.

The initiatives taken by the government have been mostly successful. In a recent update from the government, National Cabinet approved the reopening of the Sports as well as recreation. It was agreed by New South Wales, the most populous state of Australia, last week on easing on some restriction on movement like reopening of beaches. It appears that the things are coming back on track.

Let us look at the tale of some ASX-listed companies into the business of wagering and online gaming amid COVID-19.

Tabcorp Holdings Limited

Tabcorp Holdings Limited (ASX:TAH) offers gambling as well as other entertainment services. It has three business entities: Gaming Services, Lotteries & Keno, and Wagering & Media.

Post the announcement made by the Australian Prime Minister related to the closure of specific venues to prevent the spread of coronavirus, Tabcorp highlighted that the measures would lead to the closure of hotels and clubs (Australian-licensed venues) and TAB agencies that offer the company’s Wagering & Media, Keno as well as Gaming Services products.

The convenience stores and other such outlets that provided TAH’s lottery products remained open.

On 7 April 2020, the company provided an update on the potential impacts of COVID-19 and its response to the pandemic.

TAH’s Lotteries & Keno and Wagering & Media digital channels were operational. The lotteries retail network of newsagents, convenience stores and other outlets were functional. Its Thoroughbred, harness and greyhound race meetings in Australia apart from Tasmania were organised as per the stringent state government biosecurity as well as public health restrictions.

Some Actions taken by Tabcorp during the period:

  • Temporary removal of more than 700 staff to 30 June 2020 from the businesses where there was no work due to COVID-19 closures. It was looking for its eligibility for the JobKeeper wage subsidy.
  • Full-time employees were supposed to take only one day leave every week.
  • An initial reduction of ~40% made in the number of technology contractors.
  • 20% reduction in the fixed remuneration was taken by the MD & CEO, David Attenborough.
  • The fee of Board Chairman and Non-Executive Directors reduced by 10% till 30 June 2020 along with the 10% reduction that took effect on 1 September 2019.

 

Crown Resorts Limited

Crown Resorts Limited (ASX:CWN) is Australia’s leading entertainment group and the biggest contributor to the economy as it plays a vital role in tourism, training, employment, as well as corporate responsibility programs.

COVID-19 Response and Changes in business operations amid the pandemic:

On 23 March 2020, Crown Resort announced the closure of two of businesses Crown Melbourne and Crown Perth entertainment complexes after the announcement made by the Commonwealth and relevant State Governments about the closure of all the non-essential business. These operations include:

  • Gaming activities
  • Food & beverage, banqueting & conference services apart from takeaway meals or meal delivery services.

Hotel services were available in a reduced capacity. The operations at Crown Aspinalls in the UK was stopped from operating.

On 16 April 2020, the company announced the decision to reduce its workforce after its gaming businesses and businesses under the non-essential categories were closed. CWN removed over 11,500 employees either full time or on a partial basis. Only those employees who were in the critical businesses were working during the period.

Thus, to support its employees during this period, the company agreed to pay an ex gratia payment of two weeks’ pay to the full-time & part-time staff who were removed from the role.

New Bilateral Facilities with Relationship Banks:

During this period, the company signed new bilateral facilities with relationship banks for $560 million. Also, it agreed with three relationship banks with respect to $450 million in project finance to assist in the construction of Crown Sydney.

On 4 May 2020, Crown Resorts Limited provided the trading updates for the period 1 July 2010 to 23 March 2020.

  • Normalised EBITDA was ~$500 million
  • Normalised NPAT was ~$210 million.

 

CWN also highlighted that during the period, its gaming activities and other non-essential services that were suspended should not be treated as significant terms. It comprises of those related to Crown Melbourne, Crown Perth, Crown Aspinalls, corporate costs & equity-accounted results along with any associated income tax expenditures.

Esports Mogul Limited

Esports Mogul Limited (ASX:ESH) is the owner of the most advanced pure-play online esports tournament platform.

On 30 April 2020, ESH released its operational business overview and Appendix 4C for the Q1 FY2020 ended 31 March 2020.

Operational Overview:

  • Launched two high-profile projects with Microsoft & Team Secret.
  • During COVID-19, ESH noted strong inbound interest in Mogul platform
  • In the present scenario, Mogul is well placed to fulfil the demand for all-online esports event hosting as well as the requirement for more robust marketing and branding opportunities.
  • Mogul concentrated on the improved product offering. It targeted on improving its subscribed gamers and simultaneously acquiring more organisers, teams, influencers, & publishers to Mogul.

Financial Highlights:

Recent Updates Post Q1 FY2020 end:

On 16 April 2020, Mogul launched the Asia region’s biggest Age of Empires II Definitive Edition tournament in history, the Age of Empires II Asia Cup.

Business update in Response to COVID-19:

  • Because of the travel restriction, the demand for online esports tournament platform.
  • Being the provider of superior online esports tournament platform, Mogul is highly attractive to esports event organisers, teams, influencers as well as game publishers.
  • Partnership pipeline remains solid. ESH is continuing with discussions with famous esports brands & organisations.
  • Implemented cost reduction steps.

Jumbo Interactive Limited

Jumbo Interactive Limited (ASX:JIN) is a company engaged in internet lotteries and Gaming.

Jumbo Interactive during COVID-19:

  • JIN considers health and safety as its top priority and is actively monitoring the COVID-19 situation.
  • It implemented work from home with fewer interruptions to operations.
  • Steps implemented by the management to make sure sufficient capacity for online lottery ticket sales to certify smooth operations during large jackpots.
  • Before the outbreak of COVID-19, ~75% of all Australian lottery tickets were sold through retail networks.
  • Even though there was an impact on the retail channels due to social restrictions, the company confirmed that it was well-positioned for a rise in the online lottery demand.

Trading Update Amid COVID-19:

The company feels that its sales could be impacted either up or down based on customer activity.

Financial Highlights:

The company confirmed that it is well-positioned in the present scenario with no debt. It had $65.5 million in the form of cash as on 29 February 2020.

The company also updated that there would not be any changes in its dividend policy of 85% NPAT for FY2020. Also, it expects to pay its final dividend for FY2020.

Stock Information:

 


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