Member Info for alto1

there is an even better one than that and this guy is good on 9/6/19 held called a 21% upside on wmh look at the chart he got it bang on . and if the bad news didn't keep coming uk side i think this would of kept running. also put some thought to this wmh could spin of william hill inc which would benefit uk investors but that a long way off.

that's it guys cant post charts but they don't change the story.

Summary
Appetite for sports betting in US is massive and will continue to grow as more states legalize.

Well established partnerships in the United States allow William Hill to quickly get to market as new states legalize, thus offering a first mover advantage.

Operations in UK and growth in Europe provide a sturdy backbone of profitability from which US operations can grow.

Founded in 1934, William Hill (OTCPK:WIMHY) is one of the world's oldest and most established betting and gaming companies. Over the past several years, their stock has taken a beating with stagnation in the UK markets. With new leadership, William Hill is well positioned to take on the new, and booming, US sports betting market.

Note: William Hill is a UK based corporation. In this article we discuss William Hill US in dollar denomination. UK based figures are written "as is" in GBP (£). Dollar to GBP calculations used later in the article use an exchange rate of

William Hill
William Hill is UK based and still derives a majority of their revenue from there. Recent regulation changes surrounding betting machines and their betting limits in the UK have left their retail operations (largest segment ~48% of revenues) on a bit of shaky ground, but they're fighting their way out.

In the United States, William Hill is a major player alongside some names you're likely familiar with in DraftKings and FanDuel. In fact, in one of the nation's newest markets, New Jersey, William Hill is in third place with 12% market share (Per 1H filing - PDF). This, despite starting things up in the US with a relatively unknown name.

Through a partnership with Eldorado Resorts (ERI), William Hill has a solid first mover advantage as new states legalize sports gambling. Should the state require a ground based casino first, Eldorado is likely already there to help out with licensing. Eldorado also recently acquired Caesars Entertainment (CZR), and as part of their deal with William Hill US, William Hill will become the exclusive operator of the sports book in those properties. In exchange for this, Eldorado Resorts acquired 20% of William Hill US.

The biggest catalyst for William Hill is the potential for growth in the United States, where sports gambling is slowly becoming legal across the nation.

This new legality was fueled by a Supreme Court decision to overturn Professional and Amateur Sports Protection Act of 1992 (PAPSA) in 2018. Since then, states have been passing legislation to open up sports gambling within their boarders. Some are opting for land-based locations only to offer it, some are accepting of online platforms. William Hill has the capabilities, and partnerships, to expand into states at a fast pace, no matter the legislation.

So far, there are 20 states where sports gambling is legalized. Over the next two years, Darren Rovell of the Action Network projects that 17 more will come online as can be see in the image below.

Out of the 20 states where sports gambling is legalized, 13 states are currently operational and accepting wagers. William Hill is live in 10 of those 13 giving them a national market share of 26% of all legal wagers (Per unaudited quarterly update - PDF).

So, how much are we talking? Well, it's hard to say. Some estimates think legal betting is worth around $8B per year by 2025, while Morgan Stanley (in the same article) thinks it could be as high as $15 Billion.

If we assume the $8B number put out there by Morgan Stanley, and William Hill's long term goal of maintaining 15% market share, then William Hill's share of the pie would be a whopping $1.2B in recognized revenue (on top of their other operations).

These numbers are not looking farfetched either. During the first half of 2019, William Hill US took over $1B in wagers and had a gross winning margin of 6.5% on those bets generating $68.6mm in net revenue.

Given that William Hill US's strategy is to expand into new states as fast as possible, we can expect that the numbers above will continue to grow year-over-year. If the market remains favorable to sports betting, $5B in annualized wagers (which should generate $300-500M in net revenue), looks on the horizon by 2021.

UK Retail Woes
While the US market is exploding, thanks to regulations being removed, the UK market has taken a regulations hit. On April 1, 2019, UK regulations took maximum stakes from £100 down to £2 on staking machines.

UK based retail locations account for 48% of group revenue for William Hill. As one would expect, the change in regulation has had a negative effect on the company in that area. According to the 1H report though, the company believes the impact has been "broadly in line with expectations." Customers at retail locations have switched to sports, horse and greyhound betting giving sportsbook net revenue a 4% boost YoY.

These changes have resulted in a 12% decline YoY in net revenue from 1H 2018 to 1H 2019. Further declines are expected in the 2H as it will be the first full half with the maximum staking limits in place. As a result of the existing declines, William Hill did close 900 of their retail locations and expect to have to close 700 more that are projected to become loss making.

Given that we have not seen a full year of operations under these new regulations, it is difficult to project the full extent of their damages to William Hill's business. Management of the changes thus far does show promise though.

Based on the 1H results I believe it's reasonable to expect a further 4% growth in sportsbook net bet during the second half. This boost, assuming the standard 18.4% win rate seen in retail locations would result in £1,164m being wagered, and a net win of ~£214m. Gaming net revenue can be expected to drop another 30% with location closings and a full period of regulations. Such a drop would result in a £130m net, bringing total retail net revenue to £344m for the period, or a drop of ~12% from the first half of 2019.

The Move to Online (and Europe)
With retail losing its luster, and the UK market having plateaued, William Hill has been making the mass migration to online play. Online, non-US makes up 45% of group revenue (1H 2019) with close to £5B wagered per year and a win rate that hovers around 8%.

A recent acquisition of Mr Green has also helped broaden the company's scope across mainland Europe. When it comes to Online, 66% of net revenue is UK based, while the other 34% comes from international markets (excluding US). This level of diversity is promising, especially when it comes to changing regulations around the world.

Online net revenue for the H1 2019 period came in at £367.3m, a 14% growth YoY despite a 0.3% lower gross win margin. With continued expansion throughout Europe via Mr Green and a stable UK market, 10% growth in Online (sans US) is entirely reasonable.

A Risky Proposition
This would not be an investment thesis without considering the risks associated, so let's dive in. I see several major risks that any investor should be aware of:

Gambling is, by its nature, inherently risky. There's a big difference between a 5% win rate and an 8% win rate.
Gambling is also subject to regulation swings. New governments could strike down gambling.
In some instances, ease of market entry can mean lots of competition. Gambling also attracts less legitimate actors, which also add to the competition.
Finally, and this one goes hand in hand with the above, branding is everything. If William Hill can't brand themselves correctly in newly legalized states, it's an uphill climb.

Gambling is Risky

With a string of bad results, a book can be beat. This is why book management is a good thing, it's why bookmakers offer odds.

With diversity in their offerings, and the backing of some gaming products (digital table games, slot machines etc.) a string of bad beats in one area will not be the end of William Hill, but it could make an exceptional quarter look bad.

Nevertheless, I was interested in how often the books lose money. Conveniently, David Purdum of ESPN on Twitter recently had the answer... not often at all.

Nevada sportsbooks won a net $31.0 million in November, $22.4 million from football (college and pro). Statewide, Nevada sportsbooks have not suffered a losing month since July 2013.

This one is more difficult to project, but diversity is key. If William Hill were to still be solely operating on the UK high-street, problems would be afoot.

With operations in several countries, both in person and online, regulation changes would be a hassle, but would not be the end of the road. As we have seen with the recent £2 limit on staking in the UK, the company knows how to put a plan in place and execute upon it to ensure that the company continues to generate profits long-term.

Ease of Market Entry

Sportsbooks are easy to operate. A new operator could buy access to odds, and offer up a way to accept bets with ease. So, what's keeping William Hill atop the pile? Regulations. Legitimate sports books have a long list of requirements they have to meet. This doesn't stop well financed players from entering the game, but it does make things a bit more difficult.

To go along with this, in the United States, some states as part of their legalization require physical structures where players can sign up for accounts. With their Eldorado Resorts partnership, William Hill has this access.

Quick, name the largest bookmaker in the United States! If you guessed William Hill, you'd be right. Some of you may have gone with MGM, or perhaps even one of the fantasy companies like DraftKings or FanDuel. These are all big, but none are quite as large as William Hill.

Branding will continue to be an issue going forward, but by being among the first bookmakers to enter a newly legalized state, William Hill tends to find themselves with a first mover advantage. As previously mentioned, they are looking to keep a 15% market share nationally, and are (per 1H 2019 filing) taking ~26% of all legal bets in the US.

Thanks to a rather large impairment charge during William Hill's 2018 fiscal year, the books look a mess. Impairment was levied against retained earnings, resulting in stockholder equity collapsing, so this stock does not come close to meeting Benjamin Graham's Net-Net Working Capital (NNWC) criteria.

Given that we're looking for growth here, the best method of valuation is to reasonably determine how big the US market can be, and how much of it William Hill can reasonably hold. From there, we'll mark down the retail sector, and factor in growth for online (UK market moving there, and growth throughout mainland Europe).

Assuming a win rate of 6% in the US (slightly below NV average), the US market will be worth ~$8B in 2025 using straight line growth of ~60%. Is 60% a lot? It sure is, but consider that sports is already a massive market, as is betting on sports. Making this legal and accessible is a huge market and will be a game changer. 60% may actually be conservative.

With a 15% market share (the group's stated goal) in 2025, William Hill will have net revenues just north of $1.2B, net of partner fees they'd be closer to $966M, and while it's obviously not static, I converted this back to GBP at a rate of 0.76 so all numbers lined up.

US Net Win $8,053
William Hill US Market Share 15%
William Hill US Revenues $1,207.95
Net of Partner Fees $966.36
To GBP £734.43
Table data in millions.

Turning now to the other segments, Retail will fall this year and is likely to continue to drop over time. I have forecasted a 20% drop in revenues for 2020, 2% each year thereafter and 5% in 2024/2025 (assuming that Online would be customers preference more and more).

For Online, I straight lined growth 10%. Given that Retail in the UK is moving online and the acquisition of Mr Green (expansion into mainland Europe - licenses expected in Germany/Austria in 2020), 10% growth in revenues from this segment seems conservative.

William Hill's margin has been quite low the past few years. For FY 2019 I have 6% as they are investing heavily in growth, but this value should grow as markets mature and investment can slow down. In 2025 I have an 18% margin, which leaves the group total net profit at £450M. Even if the market keeps William Hill at a P/E of 10, this still comes out to a $5B market cap in 2025 given current exchange rates.

The above valuation will more than meet the company's stated goals from their FY 2018 (Annual Report - PDF) report to "to double profitability from 2018 levels by 2023". Along the way, 50% of profits will be paid out in dividends per the groups policy.

If you want exposure to a fast growing market where the consumer benefits from using a large firm versus their next door neighbor (marijuana I'm looking at you), then sports gambling is it. Along with firms like FanDuel (Private) and DraftKings (soon to be public), William Hill is one of three companies uniquely situated to take advantage of this growth, and by reasonable estimates return >100% to investors via growth and dividends over the next five years.

this is good news. i don't really invest much in uk stocks but my biggest conviction is in wmh. i mainly invest in nasdaq and most of my research is from the states so i am going to post something that may want you to keep your shares for a while. it's a paid for service so i will post transcript from bottom to top it's quite long so multi posts needed so wait until i have posted full article something for your Sunday reading

adszy2 what broker did you use to get your put option.

i have noticed that this board gets a lot of posts are you all day trading? if not why are a lot of you so worried about day to day sp movement. i can only assume some are over leveraged or are going to miss a mortgage payment due to over investing.

the stock market is fraud as i said just wait until the margin calls are done and you will reap your rewards. those that have over leveraged or bet there shirt to early let them get on with it fools and there money they can always go buy a bag of sand and put there head in it. for those that get what is going with the margin calls well done. for the one that say they are shorting? well done but are you smart enough to know when to get out is more important and i doubt they will post there losses when they do get caught out .

https://www.ft.com/content/59b42a9c-9c8a-11e9-9c06-a4640c9feebb