Tabcorp’s Demerger Scheme Booklet disclosed better than anticipated operational expenditure and net debt allocation according to Credit Suisse. The broker’s target price now incorporates $4.95 per share for The Lottery Corp and $1.25 per share for the new Tabcorp.
The Scheme booklet also warned of potential litigation risk, but the broker expects this offers opportunity to harmonise wagering industry fee structures. The broker assumes a -7 cents per share impact from litigation settlement.
The broker also noted a 10% lottery revenue increase in the March quarter, driving a target price increase and a suggested return of more than 15% in the next year.
The rating is upgraded to Outperform from Neutral and the target price increases to $6.20 from $5.70.
Sector: Consumer Services.
Target price is $6.20.Current Price is $5.34. Difference: $0.86 – (brackets indicate current price is over target). If TAH meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges – negative figures indicate an expected loss).
