AGI - Upcoming Interim Results

Well boys and girls, as most of you following this stock will know the big daddy of gaming ALL recently released it's interim results (for the half ending 31 March). I've been going over ALL's interim results to get a feel for how they've been impacted by COVID-19 and what that might mean for the wannabe gaming stock AGI and what we might see with AGI's forthcoming interim results due for release in Aug. So here are few of my musings.

So turning to ALL's interim results, I have to say they seem to have weathered the storm reasonably well, which is in no doubt attributable to their continued execution of their well thought out diversification strategy. Overall ALL's segment revenue was up 7% but overall profit was down 6.9%--pretty respectable give the current circumstances with COVID-19. Their online segment delivered a whopping 27% increase in revenue and 20% increase in profit. This diversification help offset declines in the Nth American and Oz land-based business. Impressively ALL still manged to grow their Nth American install base in both class III and class II (which bodes very well for their US business as casinos start to re-open)--remember ALL as a significant gaming operations business so that revenue will start to kick-in as casinos re-open which they are doing now. Their ANZ revenue had a big fall and I think this is more attributed to the fact that they have reach major saturation in a capped market rather than any impact from venue shutdowns as a result of COVID-19--ALL ANZ market is generally a for sale business and not US style gaming operations. I did have a laugh at ALL's comments re ANZ revenue downturn being impacted by "product releases"--isn't this the excuse AGI have been using for many years?

What does this mean for AGI's upcoming interim results? Well clearly the big issue for me is that AGI doesn't have anywhere near the online business that ALL has because as far as I can tell from their last results announcement their online business contributes next to nothing to overall segment earnings. So while ALL was able to offset declines in their land-based business with an impressive online business there is no way in hell that AGI will have that. I will be very perplexed if at their interim results their online business makes no discernible increase in earnings why the hell they are sticking with an online business because over the years they will have demonstrated an inability to grow that segment unlike their competitors. So my tip is that AGI's overall segment revenue and profit will take a massive hit as there will not be anything to offset what I predict will be a nasty downturn in their land-based segments. AGI's ANZ game performance is woeful at best so I doubt we will see any uptick in their ANZ segment despite the recent launch of their new cabinet. It is game performance and not a new cabinet that will drive ANZ sales and with gaming venues in Australia closed until who knows when there will be very few if any sales of new machines as they just simply do not have any proven and sustain game performance. Let's look at AGI's Nth American business, with the release of their new cabinet in Nth America and a few games that have a little performance my prediction is that with venues re-opening we might see a slight uptick in their Nth American sales, but here we are at the end of May with US casino only just starting to open so I'm dubious that we will see any credible unit sales out of Nth America before the EOFY. Unlike ALL, most of AGI's US revenue is from outright sales as opposed to gaming operations so I don't think the re-opening of casinos in the US will mean much for AGI gaming operations revenue. AGI's Nth American revenue in my opinion looks very questionable.

I sincerely hope my prediction for AGI interim results is wrong, but I guess time will tell. I look forward to checking in with everyone on this come 25 August.