Another company that I think I may take a small position in: Leisure and Gaming. Its main business is as an Italian bookmakers. I've previously considered William Hill or Ladbrokes, but the price hasn't been attractive enough... LNG is cheap, and hopefully they are about to become quite profitable.
The last two quarters they've made a gross profit of EUR2.1m and EUR1.8m. Admin costs are about EUR1.3m per quarter, so I reckon that's a pre-tax profit of EUR1.3m in 6 months. Let's extrapolate over a year: EUR2.6m is about £2m. They've got so many losses they won't be paying tax for a while, but for the sake of argument assume 30%, giving a net profit of £1.4m.
Their market cap is £6m at 7p. A reasonable P/E ratio for a small illiquid accident-prone bookie like this is, I reckon, 8. £1.4m by 8 is £11.2m. So fair value is 13p. They are definitely cheap.
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