GGRAsia – Aristocrat FY2022 revenue to grow 20pct y-o-y: JP Morgan

Aristocrat FY2022 revenue to grow 20pct y-o-y: JP Morgan

Jun 27, 2022 Newsdesk Industry Talk, Latest News, Top of the deck

Slot-machine maker and game-content provider Aristocrat Leisure Ltd’s business performance in the Americas land-based segment has “recovered beyond pre-Covid-19 levels”, said a Monday note from JP Morgan Securities Australia Ltd.

The institution expects Aristocrat Leisure’s group-wide revenue to grow 19.8 percent year-on-year in financial year 2022, to nearly AUD5.68 billion (US$4.0 billion).

The financial year for the gaming supplier begins on October 1, and ends on September 30 the following calendar year.

JP Morgan expects Aristocrat Leisure’s financial year 2022 earnings before interest, taxation, depreciation and amortisation (EBITDA) to expand by 20.5 percent, to just under AUD1.84 billion.

The institution anticipates Aristocrat Leisure’s actual 2022 net profit after tax will rise 18.3 percent year-on-year, to AUD970 million, from AUD820 million last financial year.

In May, Aristocrat Leisure announced that another measure of profit – normalised net profit after tax, to take account of the fluctuations of currency values relative to the Australian dollar in the markets where it operates – had risen 40.9 percent for first half ending March 31.

Aristocrat’s products include so-called Class III slot machines for the commercial-casino sector – as well as digital social games content – for markets in the Americas, Australia and New Zealand, and “international” markets, the latter encompassing for the land-based product range, the Asia Pacific region including Macau and Singapore.

Aristocrat Leisure had “extremely strong free cash flow generation and a multi-year growth pipeline across multiple avenues,” noted analyst Donald Carducci.

Real-money iGaming betting products “should be live across two United States jurisdictions by year end,” he added.

Mr Carducci had a note of caution regarding Australian Securities Exchange-listed Aristocrat Leisure’s traditional segment, casino- and clubs-based electronic gaming machines, and in particular, the group’s home market for those products, Australia.

There had been “consistent decline of electronic gaming machine expenditure,” noted the JP Morgan memo.

“Australian per-capita gaming expenditure has declined 0.7 percent on average since 2007-2008, which could indicate a shift of preference within the gaming sector,” the analyst wrote.

“This shift, coupled with technological advances, may favour emerging industries such as virtual reality or skills-based gaming,” he observed.

Nonetheless, JP Morgan noted Aristocrat Leisure had net cash amounting to AUD524 million, and had flagged at the time of the financial-year first half results it had authorised a share buy-back programme worth up to AUD500 million.