PAP.L Share News (PAP)

Peel Hunt does not expect any significant changes to gaming taxation from this week's Budget, but notes that the chancellor may throw down a marker that could have significant implications for parts of the gaming industry in the long term.The previous government gave gaming companies the option of being physically present in the UK and paying 15% gross profit tax (GPT) or situated offshore and paying low single-digit rates of tax. While Peel Hunt thinks that it is highly unlikely that the Budget will contain new taxation rates, it highlights the potential impact if the government were to introduce a 15% tax on remote gaming:In the short term, the broker would expect the larger companies to invest in the margin to put pressure on smaller players and squeeze them out of the market. "There would be some short-term pain, but ultimately Ladbrokes and William Hill could be beneficiaries, as could Paddy Power and Rank (who benefit from strong brand awareness in the UK and the ability to leverage their land-based retail operations)."Peel Hunt thinks the biggest potential loser would be 888, which generates the greatest proportion of revenues from the UK of any other peer. "888 already operates on relatively low margins and a GPT would put serious pressure on the business.""We believe that Sportingbet would consider its strategy in the UK should a remote gaming tax be introduced, but this would have little (if any) impact on profits," says the broker.Finally, Peel Hunt says that while Playtech is a complex situation - with around a quarter of revenues generated from the UK through a combination of its licensee base and its investment in William Hill Online - as a business to business provider it could be insulated from the full impact of a GPT, although not completely.In spite of RBS's preference lying elsewhere in the sector, it upgrades hedge fund manager Man Group to 'hold', from 'sell', following the recent share price weakness.The broker estimates that Man has around 23% of its group funds under management (FUM) exposed to Japan: 15% sourced from Japanese (retail) clients; and 8% from its GLG Partners division. The share price has fallen by around 13% over the last 13 days."The impact of this is likely to be some redemptions, although given most Japanese retail exposure is likely to be in the form of structured product with average duration over a number of years and with early exit fees, the risk is more likely to be the impact on future sales," says the broker.While the FUM exposure to Japan means the stock is likely to continue to underperform other asset managers, the broker believes the stock now represents fair value. The target price is unchanged at 244p.Schroders ('buy') and Jupiter ('buy') are the broker's sector preferences as it continues to prefer traditional asset managers, "particularly those with UK/European retail exposure, over alternative/hedge funds."Overall current trading at Northgate remains robust, but UBS remains concerned with longer-term problems and keeps its 'sell' rating.The light commercial vehicle hirer announced Friday that it is trading slightly ahead of expectations, and the broker expects an announcement of debt refinancing in the next couple of months."We had expected residuals to soften in the second half with more capacity coming onto the market, which has not transpired. We now forecast £14.4m residual profits in UK (from £9.6m) which drives the majority of our profit before tax upgrade from £43m to £49m, with an earnings per share forecast upgrade of 14%", says analyst Alex Hugh.However, UBS's negative stance is retained "as we believe the budget's constrictions in Spain will drive significantly lower construction activity which we expect to impact Northgate, driving further fleet contraction there," says Hugh."In the near term our 'sell' call is challenged by trading, and we remind investors our call is based on 2012/13." The target price is raised to 280p, from 250p.