Oct 10, 2016 Newsdesk Latest News, Top of the deck, World  
Debt to earnings ratios of Australia-based slot machine maker Aristocrat Leisure Ltd are “superior to [its] major U.S.-based gaming supplier peers and provide ample financial flexibility to counter the industry’s secular challenges,” says a recently-issued report from Fitch Ratings Inc.
As of March 31, 2016, Aristocrat’s gross leverage, net leverage and free cash flow/revenue were, respectively, 2.4x, 1.9x and 17 percent, noted Alex Bumazhny, Fitch’s senior director for gaming, lodging and leisure, in a compendium report from Fitch on the outlook of the global casino gaming industry.
Aristocrat – which is listed on the Australian Securities Exchange – has been given a “bb+*” credit opinion in Fitch’s latest report; and a “bbb–*/rr1*” rating for its senior secured credit, with a “stable” outlook.
Fitch stated that by contrast, Aristocrat’s market rival, gaming technology and lottery services firm Scientific Games Corp – which Fitch said was not publicly rated – had a “base case” 2016 gross leverage of 7.9x.
Mr Bumazhny said this was “uncomfortably high, given that more than half of Scientific Games’ revenues come from the secularly-challenged slots sector”.
“Our concern over the leverage is partially offset by Scientific Games’ positive free cash flow, good business diversification, and leading position in table games, slot systems and instant lottery segments,” added the analyst.
He noted that Aristocrat was in a position to use its free cash flow to pre-pay debt; observing that currently its only major debt was a “pre-payable, covenant-lite term loan maturing 2021”.
Aristocrat’s net profit after tax jumped 105 percent year-on-year in the six months to March 31, the firm said in a May filing. The group added the improvement was supported by “further growth in share, average selling price and overall average fee per day across Aristocrat’s core segments in North America and Australia, together with continued earnings growth and record [numbers of] daily active users in the digital social gaming business”.
But Fitch said in its latest review that Aristocrat faced headwinds common across the sector.
“Aristocrat’s revenue growth has been driven by market share capture. As market share growth ebbs, [its] slot shipment growth will rely increasingly… on the slot industry fundamentals, which Fitch views negatively,” said Mr Bumazhny.
“IGT [International Game Technology Plc] and Scientific Games, the legacy leaders, are determined to regain their share, while smaller suppliers, such as Everi [Holdings Inc] and Ainsworth [Game Technology Ltd], are trying to make inroads.”
In June it was announced that Ainsworth Game shareholders had approved the sale of a 52.2 percent stake in the company to Austrian gaming equipment maker Novomatic AG.
U.S.-based Everi – a specialist in cash handling technology and electronic game content for the casino industry – reported in August its second-quarter net loss had narrowed year-on-year, thanks to increased sales.
IGT’s revenue from international gaming product sales – which excludes its core markets of North America and Italy – fell by 24 percent year-on-year in the second quarter, the firm announced in July.
Fitch said in its latest report it “views favourably” Aristocrat’s “improved diversification” via its 2014 purchase of Video Gaming Technologies Inc, a U.S.-based class II slot supplier, and its 2012 purchase of Product Madness, a social game developer.
But the ratings agency noted: “Another credit overhang is a possibility of another leveraging M&A [mergers and acquisitions] transaction, with Aristocrat stating in the past that it wants to grow its digital portfolio.”
May 18, 2023
Mar 16, 2023
Jun 02, 2023
Jun 02, 2023
Jun 02, 2023
Genting Singapore Ltd says Lam Yi Young has resigned from his role as deputy chief executive of Resorts World at Sentosa Pte Ltd. The latter firm is an indirect wholly owned subsidiary of Genting...Jun 01, 2023
Alfastreet, a manufacturer of electronic gaming machines,...Jun 01, 2023
Casino equipment maker Sega Sammy Creation Inc is tweaking...Jun 01, 2023
The iGaming segment in Asia “has grown rapidly” since...May 31, 2023
Showing slot machine players – via animations on the...May 31, 2023
Macau stocks in likelihood “have been punished too much...May 31, 2023
There are foreign companies still interested in investing...May 31, 2023
Thailand could pass the necessary enabling legislation for...May 30, 2023
China will remain a key market for Asian gaming...May 30, 2023
Alejandro Tengco (pictured in a file photo), chairman and...May 30, 2023
There are “plenty of reasons” for the global gaming...May 30, 2023
Gaming equipment provider International Game Technology Plc...May 30, 2023
The Global Gaming Expo (G2E) Asia 2023 Special Edition:...May 29, 2023
Austria-based gaming equipment maker and operator Novomatic...May 25, 2023
Sports betting and online casino operating platform...May 24, 2023
The business performance in Asia of gaming content and...May 18, 2023
The organisers of Global Gaming Expo (G2E) Asia 2023...May 17, 2023
Gaming content and equipment supplier Light & Wonder...May 16, 2023
Casino equipment maker Sega Sammy Creation Inc is to...May 09, 2023
Casino slot machine and digital gaming content provider...May 05, 2023
The Global Gaming Expo (G2E) Asia event in Singapore is the...May 04, 2023
An adviser to a Thailand parliamentary committee mulling...(Click here for more)
US$8.1 billion
Macau’s casino gross gaming revenue in the five months to May 31