AGI has notified the ASX it will bring forward its Half Yearly Profit Announcement from the latest legally allowable date to the 19th August, 2025. Many shareholders have been highly critical of AGI's original proposal to not provide an update of the company's half yearly profit results before the Scheme Meeting. I very much agree with this sentiment.
It is a legal requirement to notify shareholders at least ten days before a Scheme Meeting of a material change in expected profits ie. a divergence between published forward guidance profitability and actual profitability. A company may also simply provide ten days notice because it is good corporate practice i.e. where there is no divergence in forecast vs actual profit results.
The above means that if there is a divergence in forecast (profit guidance) versus actual results, shareholders will have been given the legal minimum time to consider the results before deciding whether and how to vote at the scheme meeting presently scheduled to be held on Friday the 29th August, 2025.
On the other hand, if there were no divergence between forecast (profit guidance) results and actual results, the requirement to notify shareholders a minimum of ten days beforehand would not be legally required.
In my opinion it is quite likely the results will be lesser than forecast. This may concern shareholders and be decisive in terms of whether to vote for or against the scheme. Below is my reasoning for this opinion.
Having grown up in the industry, I recall the launch of numerous of new generation product lines over the years. The launch of a new product line is capital intensive and therefore very costly. With these costs often carried for several years in advance of a product launch. The cost of development cannot be recouped before the product makes it to market. Even then many machines are placed "On participation", meaning the capital cost recovery is further delayed in comparison to an outright sale.
On the flipside to the above, the outgoing poker machine model is usually far less popular than the new machine replacing it; much like a new generation car model. Many people will be familiar with discounting of run-out model cars at their local car dealership. Poker machines generally go through the same process. This means the remaining stock of poker machines is usually discounted with resulting lower profit margins.
The transition described above generally sees not only decreased profitability on sales margin on the outgoing product as already described, but also lower profitability on the new product as a result of low sales volume and higher upfront maintenance costs.
When a new product line is released, it usually takes a little time for customers to adopt the product due to the normal fears customers have with a new product e.g. Will the product produce more floor revenue than the old product; will it be reliable; have all the bugs been ironed-out of the software, firmware and hardware, etc..
The process described above typically takes about six months to run its course.
Now to the interesting part..................
AGI launched its very appealing Next Generation Raptor cabinet on February 21st, 2025. You can see a link to the announcement below. The company describes the new product as representing "A New Era" and "With the launch of the RAPTOR™, its innovative game portfolio, and strategic leadership vision, AGT is poised to make a significant impact in the APAC region in 2025.". This is certainly a very different perspective than the dull, droll and downbeat perspective of Mr Neumann at the last AGM meeting. Orthogonal to reality is a term that comes to mind.
From an investment analyst perspective; as a person who spent part of their youth manufacturing components and building poker machines from scratch; as a person who has spent most of their life to a greater or lesser degree involved with or observing the industry, I would tell you that new product launches generally sap profitability. I'd also say that if a new product does well early on, it's a very positive sign of things to come.
As for the timing of purchase offers, product launches and profitability; I'll leave that to your own conclusions.
AGI Price at posting:
$1.02 Sentiment: Hold Disclosure: Held
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