Not a lot of interest in this stock in these forums. Don't think you're missing anything here. The problems with their software distribution business have really hammered the share price. The lottery division is meanwhile going great guns and this is where the real potential is. Even forgetting about the "blue sky" US expansion the Australian lottery business has grown sales from $25million to $42 million to $66million over the past 3 years. The lottery division produced a NPBT of $4.7 million last year. With a current market cap of 12 million the market is pretty much missing the whole story, or just seeing the software distribution disaster. The big risks are the contract renewals with the lottery operators - but I can't see why they wouldn't renew the contracts unless there is some sort of major stuff up - they are really just another sales channel. The big positives for the current Australian lottery business are: - As sales increase their margins will also increase - there is not much additional cost in selling more tickets. - As they add online players they are really growing their marketing database - those players get reminder emails when there is a big powerball draw etc. . - Also as time goes on the proportion of the population that would use online services increases. Most 60+ years old would probably not consider buying their lottery tickets online but anyone under 35 would have to wonder why you would go to a newsagent to buy something you can get on the net. - The company currently holds around $4million of players funds which they earn interest on but don't pay interest to players. The company receives the cash from players before they pay the lottery operator - shouldn't have any cash flow problems.
On the US expansion, I think the company said in an earlier Boardroom radio - there are 42 states and 1 territory in the US which have lotteries and Manacomm has already talked to all of them. Of course nothing can happen in the US until the Barney Frank bill is passed. You can do a web search on HR 2267 to find out more about this bill and the likely hood of it getting passed soon. I will wait and see on this one.
It will be interesting to see how lottery sales are tracking this year without those big powerball draws of last year. Mike Veverka is a buyer at current price levels which is a good sign. It is not the sort of stock to put your whole net worth in though.
PS. has any checked checked if Rob Oakeshott or Tony Windsor are against online lottery sales....... could be a risk......or maybe the NBN is so country folk can get better ozlotteries.com access. The greens should be pro online lottery - it does save trees.
MNL Price at posting:
32.5¢ Sentiment: Buy Disclosure: Held
