32Red

Fuelled by its ongoing marketing efforts, online casino 32Red (TTR) is building a strong market presence, and signing up plenty of new customers.

In July the Gibraltar-based firm issued a bullish update in which it stated that results would smash forecasts. Following this, first-half figures to 30 June revealed record revenues, up 42% to £11m, as pre-tax profits leapt almost sixfold to £1.1m. Active casino customers jumped 12% over the period to 21,745 as the player yield increased 27% to £438.

The soaraway performance has continued into the second half, as sales in July and August revved up 51%. AIM-listed 32Red sponsored Swansea Football Club last season, and against all the odds the Welsh side secured Premiership status, a move that has expanded the global reach of 32Red. A new series of television adverts has also just been launched to complement its sponsorship efforts of horse racing and other televised sport.

A trade mark action with William Hill will lead to the recovery of its £900,000 legal costs, and with a hearing due in December there is also scope for substantial damages to be awarded. To match the full-year payment, 32Red is rewarding shareholders with another 0.5p dividend – a sum that it can easily afford given the 63% leap in its cash balance to £2.4m.

Speaking to Growth Company Investor, chief executive Ed Ware said, 'We have a distinctive brand name that people remember.' In March we highlighted the shares at 23.5p, but we believe that 32Red has further to go. Broker Numis is forecasting 2011 pre-tax profits of £2.1m and EPS of 2.8p. With consolidation in the sector, coupled with a windfall likely from William Hill, we remain positive. Buy.