Rank is a gaming-based leisure and entertainment company. Its Grosvenor and Mecca brands are market leaders in UK multi-channel gaming and it also has operations in Spain and Belgium. In FY17, 85% of revenues came from its venues and 15% from its digital operations.
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Rank’s trading update (13 weeks to 1 April) showed 17% growth in Digital, but the core Venues disappointed, with Mecca down 2% and Grosvenor down 9% on a like-for-like basis. The shortfall was largely due to fewer customer visits, as well as a lower gross win margin from VIPs. The company expects the weaker consumer environment to continue and has now guided to FY18 clean EBIT of £76-78m vs previous consensus of £83m. We have adjusted our forecasts to the lower end of guidance. The stock has dropped sharply on the news and trades at 5.7x EV/EBITDA and 11.8x P/E for CY18e, which is a meaningful discount to peers.
Y/E Jun |
Revenue (£m) |
EBITDA (£m) |
PBT (£m) |
EPS (p) |
P/E (x) |
P/CF (x) |
|---|---|---|---|---|---|---|
| 2016A | 753.0 | 128.2 | 77.4 | 15.4 | 6.7 | 3.7 |
| 2017A | 755.1 | 128.8 | 79.3 | 16.2 | 6.4 | 3.5 |
| 2018E | 754.0 | 120.0 | 73.9 | 14.7 | 7.0 | 3.5 |
| 2019E | 774.8 | 125.0 | 78.0 | 15.7 | 6.6 | 3.2 |
Content on Rank Group
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Consumer
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Share price graph
Balance sheet |
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| Forecast net cash (£m) | 8.3 |
| Forecast gearing ratio (%) | N/A |
Price performance
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12m |
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Key management |
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| Ian Burke | Chairman |
| Henry Birch | CEO |
| Clive Jennings | FD |
| Paul Richardson | Group Director - Strategy & Development |
| Sarah Powell | Head of Treasury & Investor Relations |