Online gaming and betting company Centrebet could take part in...

Online gaming and betting company Centrebet could take part in industry consolidation both as a target and as a predator, according to a Wilson HTM analyst.

Centrebet, which debuted on the Australian Stock Exchange in July, is likely to be attractive to large gaming operations such as UK listed company PartyGaming Plc - the world's leading online gaming company, the analyst said today.

"We believe Centrebet to be in a solid position to take part in industry consolidation both as a target and a predator," said Wilson HTM analyst Simon Fritsch. advertisement

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"Centrebet's key asset is its sports book and strong presence in Australia and Scandinavia.

"We believe this would be attractive to the large, pure gaming operations such as Party Gaming Plc and 888 Holdings Plc."

He said European-based gaming companies William Hill and Ladbrokes could also look to Australia for acquisitions.

Mr Fritsch said it was also also likely Centrebet would be attractive to companies seeking non-US geographic expansion such as Sportingbet as well as Australian land based operators.

"As a predator, Centrebet has potential to extract significant synergies via bolt-on acquisitions of smaller online gaming businesses."

Wilson HTM today initiated coverage of Centrebet with a buy recommendation and 12 month share price target of $2.35 per share, up from $1.80 at 1133 AEST today.

Mr Fritsch said Wilson HTM's forecast of Centrebet's earnings with a target price to earnings multiple of 14 times was "conservative".

"Given our earnings per share estimate for 2007/08 of 16.7 and our target price to earnings multiple of 14 times, we have a twelve month share price target of $2.35 per share."

Centrebet has forecast a 4.65 per cent, fully franked, dividend yield for the 2007 financial year with an adjusted net profit of $11.6 million.

It has also forecast adjusted earnings before interest and tax (EBIT) of $14.6 million in 2006/07, following on from $8.5 million in 2005/06 and after making $6.9 million in 2004/05.

Wilson HTM Ltd and its associates have relevant interests in 5.69 million Centrebet securities and the company was lead manager and underwriter to Centerbet's initial public offer.