Ann: Flexi-NET Acquisition complete, page-2

Latest from Eureka:

eBet (EBT):

The gaming solutions company’s August announcement should please both dividend and growth seeking investors. Management is promising a 57% increase in full year dividend to 5.5 cents a share for 2013-14 and I have upgraded the price target on eBet by 12% to $5.30 to account for its latest acquisition of Flexi-NET.

Flexi-NET competed with eBet in providing stored value card solutions to gaming venues and has 84 locations in New South Wales using its product. eBet is already the largest gaming systems provider in the state, and the deal will add further scale to eBet’s business.

I have upped my 2014-15 and 2015-16 sales estimate by 10% and 11%, respectively, to $60.9 million in the latter year. Further, management is planning to undertake a capital return of between 5 cents and 6 cents at its annual general meeting later this year. This is likely to deliver a yield of around 3.4% including the 50% franking credit on the regular dividend. This may not sound very exciting to many income investors, but eBet’s robust earnings growth potential should see its dividend rise in the coming years.

I reiterate my “buy” recommendation on the stock