GGRAsia – JP Morgan cuts Aristocrat 2023 outlook on Playtech miss

JP Morgan cuts Aristocrat 2023 outlook on Playtech miss

Feb 07, 2022 Newsdesk Latest News, Top of the deck, World

The revenue forecast for Aristocrat Leisure Ltd for the financial year ending September 30, 2023, has been revised downward by more than one-fifth by brokerage JP Morgan Securities Australia Ltd. Aristocrat is a Australia-based slot machine maker and digital game content provider.

The institution said in a Sunday memo that the change in its estimates was linked to the “rejection” by shareholders at Playtech Plc, a provider of gambling software and content, of Aristocrat’s bid to take over Playtech.

JP Morgan now expects fiscal year ending September 2023, to generate AUD6.66 billion (US$4.72 billion) in revenue for Aristocrat, down 22.3 percent on the nearly AUD8.58-billion it had forecast when it looked as though the Playtech deal might be closed during the first half of this year, by the suitor’s own reckoning.

Playtech has a presence in multiple gambling markets in Asia Pacific and worldwide.

In November, Aristocrat reported to the Australian Securities Exchange revenues of nearly AUD4.74 billion for its fiscal-year ended September 30, up 14.4 percent from the prior-year period.

On Sunday, JP Morgan also revised downward, by 12.5 percent, its forecast for Aristocrat’s earnings before interest, taxation, depreciation and amortisation (EBITDA) for the period ending September 30, 2023. It now expects such EBITDA to be AUD2.05 billion, rather than the nearly AUD2.35-billion it had been anticipating.

On February 2, more than 50 percent of Playtech shareholders voted in favour of Aristocrat’s takeover offer, but the majority secured did not meet the 75-percent threshold needed to enable the deal to go ahead.

Australia-based JP Morgan analysts Donald Carducci and Michael James had said in a February 3 note, that although the value of the Playtech business was “now lost as a whole” to Aristocrat, the balance sheet and outlook for the jilted suitor were “not all bad”.

The analysts added, referring to Aristocrat’s current social gaming products and the group’s potential for expansion into other online product fields: “A mandate to enter real-money gaming/iGaming has more than one path.”

They further noted, alluding to a possible future sell-off of Playtech assets in parcels: “Content-led strategies will always favour Aristocrat Leisure, but given the potential Playtech sum-of-the-parts break-up, negotiations may still persist for a platform.”