Sceptre Leisure

HOLD

04/05/2011 Ben Jaglom

Gaming group Sceptre Leisure (SCEL) has announced that it has won three contracts worth a total of £1.5m.

The deals are to pub chain Joseph Hold Limited, which has agreed a two year contract with Sceptre to supply its products to its 130 pubs, with Sceptre enthusing that 'the contract continues the close working relationship built up over more than twelve years.'

The other agreements are with hotel chain De Vere Hotels, which has extended its current two year agreement by another year to August 2012 and covers De Vere's chain of hotels. There was also a deal with the McManus Pub Company which agreed a two-year to supply Sceptre's products to its chain of 13 pubs.

Speaking to Growth Company Investor CEO Ken Turner enthused that the company 'keeps on lifting the bar on customer service' noting that what was supplied included 'jukeboxes, TVs, snooker tables and quiz machines'. In particular he noted that new fruit machines are now able to make payouts in the form of notes as well as coins for bigger wins, something he argued has 'helped to drive income'.

Following the announcement analysts at house broker Panmure Gordon reiterated their forecasts. For the year to April 2011 Panmure is pencilling in £2.3m in profits, rising to £2.9m in 2012, with EPS of 2.7p and 3.3p forecast for 2011 and 2012, respectively, with the shares currently trading at just over nine times earnings.

Growth Company Investor recommended shares in Sceptre at 33p in 2009 and they went as high as 72p before being recommended again as a 'hold' at 29.5p last October. The recent announcement has led to the shares gaining almost thirty per cent, currently trading at 25.25p. While this boosts the company's short-term prospects, the shares remain a hold as the long-term prospects for this part of the gaming industry currently hold moderate growth prospects while the shares themselves have been on a long-term decline for the last year.