ALL - Aristocrat Leisure

[reece55]

Some advise from someone who works in the gaming indusrty. I spoke to an Aristocrat sales rep last week and he said its been the hardest time lately trying to sell equipment that he had seen in 15 years. With a looming recession or at the very least a downturn the gaming industry will feel the pinch very hard. The saving grace for Aristocrat will be their overseas sales particularly in Asia but whether that will be enough to significantly move up their SP is open to conjecture.

Mickqld
Your synopsis of the environment in Aust doesn't surprise me.

However, the market is a forward looking beast, not backwards. To me, that hard time was factored in the Company's share price some 3 - 6 months ago. The fundamentals appear to be factoring in low growth at the moment, certainly the ANALysts have their NPAT growth forecasts at between 6 - 12% per annum which using a DCF would give a valuation of between 9 - 11, depending on assumptions. Obviously the market over and undershoots these levels depending on sentiment. T/A is beginning to support this view, but as I said I would only be taking a position on a positive break of the symmetrical triangle.

Cheers

 

[dontknow]

Not good news for ALL today with the Vic ann. Tatts are cutting capex by $40m pa to 2012. I'd bet Tabcorp do likewise to cash up while the going is good.

 

[Plasmo]

Some inside knowledge on ALL that may not mean much but may mean something - it has the worst work culture of just about anywhere I know, most its employees are 50+ cranky old men and ladies with no motivation to do much of anything and no care to train or develop new staff. As a result anyone decent they do get in there leaves very quickly.

 

[reece55]

Well, looks like we received our answer on Aristocrat on Friday - clear break through support now, high volume wide candle closing on the low. With the recent changes in the Victorian gaming duopoly, it seems that both Tatts and Tabcorp will be cutting back on capital expenditure - this obviously will have an impact on ALL....

Cheers

 

[reece55]

And the slide continues..... Aristocrat now back down to 7.70 after it announced today earnings growth is likely to be about 5%, obviously well under the markets expectation, although hardly surprising if you consider the share price.... This stock is certainly in the dog house now, technicals smashed!

Cheers

 

[reece55]

Attached is an updated, much more conservative DCF, taking into account flat growth and much lower profit growth assumptions. A bit over an $8.00 valuation here based on the new assumptions, share price continues to tank...

Cheers

 

[TheRage]

Reece I agree with your commentry.

My thoughts though are that Vic Gaming changes will have less impact on bottom line than high aussie dollar which does not seem likely to abate.

 

[bluecheese101]

ALL closed today slightly higher $4.96. Anyone have any thoughts on a buy position? Or will it fall further??

 

[AS414]

Discussion of their latest announcements re: US market:

http://internationalbs.wordpress.com/2008/12/01/gambling-on-product-adaptation/

 

[So_Cynical]

ALL - Aristocrat seems to have found bottom (so far) as there has been some consistent
sideways movement for about the last 5 months...has been dipping down the last few days
since it went ex-div....at 5 year lows now.

Anyway it was the somewhat range bound SP that has attracted me...in today @ 3.38 hoping
for a run up to the top of the channel over the next few weeks...at these prices would prob be
a good one for the bottom draw too.

 

[dhukka]

ALL - Aristocrat seems to have found bottom (so far) as there has been some consistent
sideways movement for about the last 5 months...has been dipping down the last few days
since it went ex-div....at 5 year lows now.

Anyway it was the somewhat range bound SP that has attracted me...in today @ 3.38 hoping
for a run up to the top of the channel over the next few weeks...at these prices would prob be
a good one for the bottom draw too.

Looks reasonably good value on a fundamental basis. Outlook for the industry not favourable over the next 12 months but Japanese business slowly on the mend, lawsuit has been settled, still throwing off good cashflow albeit much reduced from prior years.

 

[skc]

ALL is approaching a strong resistance at the $4 - $4.1 zone. That level has held it back for almost 6 months, sending the SP back south 5 times. However, the basing pattern has been around long enough, and the recent move has broken the long term down trend.

On fundamental numbers, 2008 full year EPS of 30.5c means a PE just under 14, and yield is around 5%.

Is this a short trade in the making? Probably unwise given the recent strength in the market. Or should the trader buy on break out of the resistance?

 

[So_Cynical]

ALL is approaching a strong resistance at the $4 - $4.1 zone. That level has held it back for almost 6 months, sending the SP back south 5 times.

Top of the channel...i sold the other day, funny how some people are looking for
a break out and others happy to play the channel...prob will break out now ive
decided to have an ultra (for me) short term outlook.

My new mantra...always exit with a stop.

 

[skc]

Top of the channel...i sold the other day, funny how some people are looking for
a break out and others happy to play the channel...prob will break out now ive
decided to have an ultra (for me) short term outlook.

My new mantra...always exit with a stop.

This is quite amusing. Looking at the 6 month time frame I was all ready to short this stock, until I saw your post earlier this month about a longer term view and see the alternate long possibility

With the short trade you can have the stop at 10c away and possible target at least 50c reward. However, with the long trade, one may have to put their stop at the last swing low so the stop is ~60c away, with a $5.10 target to close that huge gap back in Oct. The reward/risk would only be ~2:1.

I am still leaning towards the short trade, given the strength of the resistance and the lack of volume on the up move, but it will be carefully watched based on intra day action.

 

[So_Cynical]

This is quite amusing. Looking at the 6 month time frame I was all ready to short this stock, until I saw your post earlier this month about a longer term view and see the alternate long possibility

with the long trade, one may have to put their stop at the last swing low so the stop is ~60c away, with a $5.10 target to close that huge gap back in Oct. The reward/risk would only be ~2:1.

Would be great to be in when ALL makes that break out to get back to that $5+ range...it will happen one day.

 

[skc]

Would be great to be in when ALL makes that break out to get back to that $5+ range...it will happen one day.

A strong break out to a high of 4.34, well above the resistance zone. But pretty average volume suggests to me just some small puppies playing the breakout? Let's see how this play out.

 

[skc]

Well what do you know. A nice profit downgrade plus capital raising send this share back down to earth.

The two bars after the initial break out looked bad - I wonder how many break out traders read that correctly and got out in time...

 

[andrewcim]

Well it got me! Another 1.5% loss to add to my capital. Took the risk on the dow entry and it looked good when it closed above the resistance level. Got done within a few days. It'll prob hit the support level and bounce back up knowing my luck.

 

[ROE]

Everyone gave up on this business yet ? Analyst seem pretty negative on

this one...dying and out of favor and a $200M law suit pending...
you cant seem to get anything good out of this guy

Terrible, Terrible stuff ....

If only it such a crab business and barrier of entry is low and return on capital is
shocker I walk away too but I cant seem to walk away from this one...demand an all out
closer look and lock and load at the right price with enough margin of safety to keep uncle Warren happy

 

[1q2w3e4r]

Barriers to entry are somewhat high. You would need the entrant of a major OS player to make an impact in the market place. Or you would need a local company operating within the same market via an auxiliary system to decide to either A) manufacture a machine or B) bring to market a machine from OS.

Len Ainsworth has been running AGT for years since he was tipped out of Aristrocrat and hasn't made a big dint into the market. The company (Aristocrat) isn't run by people at corporate level with long term experience or exposure to the Poker Machine and Club, Hotel industry, especially in NSW.

Factored with impact competitors new machines gaining popularity along with the fact fewer people like Aristocrat's new games.

The local market is also a mature market with the poker machine cap in place in NSW. Leaving substantial organic growth to come from OS sources.

Still that's just my 0.02c