Aristocrat Leisure Limited (ALL)
BUY

Poised

 16 Nov 2022
Sector: Consumer Discretionary

FY22 RESULT

Need To Know

  • Underlying earnings $1.1bn +27.1% in-line with consensus
  • Final div 26cps fully franked, payment 16 Dec
  • North America strong performance

ALL’s FY22 result mostly in-line with consensus expectations fuelled by re-opening of casinos, and a strong commitment to investing in product and operations.

FY22 NPATA $1,099m (+27% yoy) vs consensus $1,113m.

FY22 revenue $5,574m (+18% yoy) vs consensus 5,540m.

EPSA 165cps (+22% yoy) vs consensus 168.7cps.

DPS 52cps, consensus 58cps.

A high-quality result, in our view, as the North American segment stood out with very strong shipments (19,366 units) and a 7.9% lift in average US$ price per unit. Class III leased games had net additions of 3,876 units, while Class II units increased by 1,291.

Digital revenue was flat as the segment ran into headwinds from modest mobile bookings against post-COVID peaks in the prior period.

ALL spent more on D&D (design and development) and corporate expenses than thought and despite a -$14m 2H22 FX item, the full year outcome was still positive.

As usual, no full year guidance was provided for FY23.

Investment Implications

The stock has enjoyed a strong run-up into the result and may ease back given the soft look of the final dividend. We think the company is keeping its powder dry for further acquisitions, perhaps in RMG (online real money gambling) where it is building a credible business segment.

The balance sheet is well positioned to undertake acquisitions with net cash of $564m at 30 September 2022. The dividend and on-going buyback totalled $660m in FY22 and this should not impede any acquisition activity.

The business is in great shape to implement its strategy and remains a global leader in its segments.

Any share price weakness becomes a buying opportunity, in our view. We do not anticipate significant changes to consensus earnings.

Figure 1: FY22 RESULT

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Stock overview

Share Price

Company overview

ALL is a global designer, developer and manufacturer of land-based and online casino gaming software and hardware.

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