Aristocrat Leisure (ALL) Positive AGM outlook, but richly priced Short Term Reduce, Long Term Hold $9.87
Event ALL's AGM confirmed 1H05 NPAT as being between $90-100m, up around 50%, largely priced in already.
The AGM confirmed the 21 cents capital return, the date still subject to ATO ruling. The FY05 dividend will be partly franked.
Impact FY05 and FY06 ROE will stay well over 50%. ALL is effectively ungeared.
ALL's balance sheet management remains excellent. ALL generates around $250m/year in operating cashflow. This will be used to redeem the convertibles, if permitted, and presumably to continue the buy-back, while paying only partly-franked dividends.
ALL has solid growth potential in the US, Japan and elsewhere. Ever-changing regulations and volatile game demand makes forecasting uncertain, with earnings disappointment probable at some stage. Fully priced.
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