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-----------------------------------------------------posted: Sunday 2.00 a.m. Sydney time June 16, 2002 last price: 5.46 code: JUP
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Business Model
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Gaming is a fool proof business model suited to all economic seasons. Jupiters:
[1] owns interests in three of the four licensed casinos in Queensland;
[2] operates Keno throughout Queensland and NSW clubs on an exclusive basis;
[3] provides monitoring and other services for gaming machines in Queensland;
[4] owns the sports betting agency Centrebet;
[5] develops innovative gaming and wagering technology; and
[6] provides computer support services through AWA.
Key Feature
Centrebet and Keno are both set on meaningful bigger picture growth paths.
In particular, Centrebet has phenomenal growth potential. The online service is now offered in 11 languages, with French, Dutch, Italian, Spanish and Potuguese recently added, most notably, in time for the now underway soccer World Cup.
Centrebet has in excess of 100,000 registered users, and the soccer is likely to drive that user base sharply higher. Many of the new users will stick around and become regular users, and that is the key element. Centrebet has a proven product, and an exponential growth pattern in place. Looking forward, Centrebet is likely to contribute to the Juptiers pie at an increasing rate.
Earnings
On May 27, the company confirmed the previous guidance of double digit after tax profit growth [normalised - for the year ending June 20, 2002]. Notably, it said that Centrebet had, in particular, continued to grow strongly through the current period.
In terms of earnings for the year to June 30, 2002, I expect perhaps as much as $80 million.
In terms of the earnings multiple, $80m equates to 13.6, a modest valuation.
Key Levels
Looking up, the key level is 5.50, the location of a recently constructed double top. If above 5.50, that will represent a major topside break. On the downside, 5.28 is a highly noteworthy support level.
Recommended Strategy
I do not often cover my top picks in this free report. You will understand why. This week is an exception though. I am ultra bullish in terms of the price outlook for Jupiters, and I can tell you, the marketmad members are long, most from between 3.96 and 4.25. Jupiters has been one of the most recommended stocks at the site over the last year. You can see from the chart how correct that has been. I am recommending to members to continue holding Jupiters, in anticipation of seeing $6 plus.