Interesting morning star have a basically the same report altering slightly.. Is this allowed? Goes to show not to rely on these reports just read them to see if you have missed something or confirms your opinion...
The first line is incorrect ... Outlook strong revenue growth via US momentum and market share in Australia.. To me this reads a +10% increase in revenue as a min.. The reason NPAT normalised is flat is due to investment for growth which allot are one off costs..
These reports also contradict themselves.. They don't want to dismiss the one off costs but don't want to include the FX gain .. both are similar levels of importance in valuations
If you want to break it down simply...
Revenue 10+% growth
NPAT 10+% inclusive of FX
Below morningstar research:
Ainsworth Game Technology's trading update was disappointing and punctures one of our key expectations: namely, synchronised earnings growth across all markets in fiscal 2016. The only consolation to management's expectation of a flat fiscal 2016 at the normalised pretax profit level is that it appears mostly cost-driven. We are prepared to look beyond the near-term component cost pressures (due to the weak AUD) and investment spending in the Americas. Furthermore, fundamentals remain solid, with revenue on track to grow across all geographies (A600 cabinet take-up in Australia, continuing share gains in the Americas).
The uninspiring trading update was partly offset by the proposed USD 38 million purchase of Nova Technologies in the United States. Strategically, this reduces Ainsworth's reliance on lumpy outright machine sales and expands its presence in the recurring revenue market. It allows Ainsworth to share with the customer the returns from its machines placed on the gaming floor, in the form of fees per machine per day. Financially, the 8.1-8.5 times earnings before interest, tax, depreciation and amortisation, or EBITDA, acquisition multiple is line with the 8.2 times Aristocrat paid for VGT's recurring-revenue business last year, a purchase that has played a big part in the rerating of Aristocrat shares.
We have cut our fiscal 2016-18 earnings estimates by 7%-20%, with the severe downgrades concentrated in fiscal 2016, reflecting the aforementioned cost pressures. We have reduced our fair value estimate to AUD 3.70 per share, from AUD 3.90 previously.
Shares in Ainsworth are trading below our fair value estimate, with the poor trading update deterring investor interest. However, the company's fundamentals remain solid, and we see earnings recovery as merely a timing issue. We reiterate our narrow moat rating, which is underpinned by almost 200 unique jurisdictional licenses to manufacture and sell in various countries.
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