Tabcorp Holdings (TAH) Share Trading Recommendation

Submitted by Craig Strzelecki on 22 February, 2007 - 22:58

Tabcorp Holdings (TAH) have a Neytral 2 share trading recommendation and a price target of $16.65 per share from analyst UBS. Following the 1H07 results the analyst have made the following comments: TAH announced 1H07 pre-ab NPAT of $270.3m, -3.6% on pcp. The result was 3.3% below their estimate, and also below previous guidance for a "flat" result. A dividend of 47 cents per share (cps) was declared (vs UBSe of 45cps), representing about a 90% payout. Whilst not announced with this result, management commented that both capital management and balance sheet optimisation are under active consideration. 2H07 revenue YTD is currently tracking up 3% - wagering (+5.2%) and gaming (+4.7%) partly offset by casinos (-0.5%). Management describe the outlook for the remainder of the year as "remaining challenging". Their FY07 and FY08 earnings have been revised down following the result, now incorporating 1.8% normalised NPAT growth in the 2H. Whilst the stock analysts believe TAH continues to have an excellent suite of assets (not only strong market position, but also strong cash generation), they are mindful of the issues the company still faces over the next 12-18 months. With the financial impact from the potential negotiation of an extension to Star City exclusivity yet unknown, they conclude thatthey believe the stock is fully priced around current levels. Their valuation and PT are DCF-based, using a WACC of 9.0%

Tabcorp Holdings Limited is listed on the Australian Stock Exchange (ASX) under stock code TAH. You can view their investor website here. TAH was listed on the ASX on 15 August, 1994. Tabcorp is involved in the provision of gambling and other entertainment services. The company owns the Star City Hotel and Casino in Sydney and the three Jupiters Hotels and Casino properties in Brisbane, Gold Coast and Townsville. The company also has wagering, gaming and related media operations. Elmer Funke Kupper is the CEO of Tabcorp and Michael Robinson is the Non Executive Chairman. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade TAH. Check your charts and good luck with your share trading!

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