Netplay TV (LSE: NPT) released its annual results this morning, sending its share price soaring by over 20%. The interactive gaming company reported earnings at the top end of consensus expectations and is proposing to pay a special dividend of 0.68p on top of an ordinary final dividend of 0.34p.
Decent-value buy
Netplay has had to negotiate regulatory changes that saw betting and gaming duties rise to £3.8m this year from £0.5m in 2015. The company more than offset the rise by slashing marketing expenses by £4m with a more targeted strategy, and also by reducing operating and administrative costs.
Netplay has a strong balance sheet with £10.8m of corporate cash and no debt, putting it in a good position for pursuing acquisitions as well as organic growth. Management recently looked at purchasing the Football Pools business from Sportech, but decided against entering a sealed-bid auction process, which suggests the board are only interested in doing the right deals at the right price.
Trading on 13.8 times last year’s earnings at a share price of 10.5p, and with cash representing 3.7p a share, Netplay appears a decent-value buy. A dividend yield of 6.3% (which excludes the special) is an added attraction.
Good business but rich rating
Lighting firm FW Thorpe (LSE: TFW) released half-year results this morning, and also saw its shares rise (up 7% as I write). Like-for-like earnings were 7.5% higher, but actual earnings rose 14% thanks to the contribution of an acquisition.
The strong performance, and £22m cash and no debt on the balance sheet, have persuaded Thorpe’s board to pay a 2p a share special dividend on top of a 1.2p ordinary dividend.
Thorpe is a old family-run business, and the board tends not to be gushing about performance and prospects: thus, underlying growth was generally “solid rather than astounding” and management is “cautiously optimistic” about the rest of the financial year.
Thorpe’s shares have had a strong run, and while this is a company I very much like, the current share price of 236p gives a rich rating of 22.6 times trailing 12-month earnings and yield of 1.6% (excluding the special dividend). Not a price at which I’m rushing to buy.
Risky and speculative
News this morning from Amur Minerals (LSE: AMC) didn’t get the positive response from the market that the results from Netplay and Thorpe received. The shares of the nickel-copper explorer with projects in the far east of Russia are down 2.3%, as I write.
Nevertheless, the news was positive. The company reported that it had completed the annually-constructed 350km ice road to its Kun-Manie project and begun the restocking of the site for its 2016 drilling programme. Amur also said it anticipates being able to release results soon showing a successful conversion of 2015’s targeted Inferred resource area to Indicated and to have successfully added 400 metres of Inferred resource.
Given the stage of development and the geo-political location, Amur remains a risky and speculative proposition, well outside my personal comfort zone.