Playtech shares plummet 26% on second Asia profit warning
Asian revenues expected to fall €70m below expectations as a result of “sudden and acute” competition in Malaysia
Playtech has issued its second profit warning in less than a year with the supplier blaming a decline in the Asian gaming market and an influx of aggressively priced competitors.
The firm’s share price fell by 26% Monday morning, wiping hundreds of millions off the value of the company after the FTSE 250 company warned of an “increasingly competitive backdrop” in Asia, particularly in Malaysia.
Playtech’s trading update warned of “significant impact on revenue throughout the rest of the year” with Asian revenues likely to fall €70m below expectations.
“Clearly the recent trading performance in Asia is disappointing,” said Playtech CEO Mor Weizer.
“We have taken steps to further support our partners in the region and we will continue to work to preserve our position in the face of an increasingly competitive environment.
“Given that the downturn in Asia has been relatively sudden and taking into account Playtech’s centralised cost base, the vast majority of this revenue loss will drop through to adjusted EBITDA.”
Playtech was forced to issue a similar profit warning in November last year following a crackdown on gambling syndicates in Malaysia.
Revenue ex-Asia was up 7% in H1 and in 12% Q2 (ex Snai), with Snai consolidated from 5 June.
Regulus Partners analyst Paul Leyland said the update suggested Playtech’s previous B2B dominance was “unravelling” in both Europe and Asia.
“Playtech has bought and sold its way to the top of the online gaming supply chain with a sureness of foot that still deserves huge credit if not awe,” Leyland added.
“However, from a B2B perspective, the big question now is whether it can organically develop the quality of its products and services to stay there, in a rapidly changing environment.”