Trade of the Month: Phumelela is still worth a flutter for longer-term investors
Phumelela galloped home in fine style in its six months to January, lifting headline earnings 19.2% to R64.5m. It would have been higher had bookmakers paid their share of the costs of staging horse races."Bookies will eventually have to pay their share," says CEO Riaan du Plessis. "We have initiatives to persuade government."Bookmakers enjoy a cheap ride. Though they account for 60% of horse racing betting turnover, which stood at R10.4bn in 2015, they cover only about 20% of the costs of staging races.According to Phumelela, this left operators of racing and the totalisator (tote) betting system, Phumelela, Gold Circle and Kenilworth Racing, bearing R636m in costs in 2014. Aggravating the situation, bookmakers’ share of betting has risen sharply from 44% in 2009.For Phumelela, by far the biggest player in horse racing and the tote, the impact on its bottom line is huge. In the six months to January the group’s pretax loss on horse racing was R135m.Phumelela is already tackling boo...
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