Aristocrat is going gang busters. Is this growth coming at the expense of AGI?, page-4

Poker machine maker Aristocrat Leisure expects its first-half net profit to surge 66 per cent to $183 million from the year-earlier period after snatching fresh market share in Australia and the US and growing its social gaming business.

Aristocrat, which will release its first half results on May 26, said normalised net profit after tax and before amortisation of acquired intangibles at $183 million will be "well ahead" of market expectations with second half growth expected to be in line with the first half.

"This outlook assumes stable trading conditions and prevailing exchange rates relative to the first half of 2016," Aristocrat said in a statement to the ASX.

"It anticipates moderate growth across key North American segments and further growth in Digital, while the ANZ business will cycle over a strong earnings period that is not expected to be repeated in the second half of fiscal 2016."

Citi estimates Aristocrat's core net profit will surge to $306 million for the 2016 financial year after recently boosting its forecasts.

The broker also upped its estimates for the operator's growth outlook in North America based on an improvement in US gaming revenue trends. Aristocrat's $US1.3 billion deal to buy Video Gaming Technology in 2014 also appears to be paying dividends with Citi noting VGT's expansion potential outside of Oklahoma and into California as one reason for its buy rating on the stock and $11.50 target price.

Aristocrat chief executive Jamie Odell told Fairfax Media in November that investors were so happy with the VGT purchase and the acquisition of US social-game platform Product Madness in 2012 they had instructed the company to look for more transformative deals that could boost it into a bigger pokie player.

But in March Mr Odell acnowledged he was now wary of turning the company into a deal machine.

"We are aware we've done two great pieces of M&A with Product Madness and more recently VGT, but we really don't want to become deal junkies and we can't," he said. "The worst thing for us to do would be a bad deal."

Aristocrat's main domestic rival, Ainsworth Game Technology, has promised a renewed fight for pokies market share should a buyout deal be approved which would see Austrian gaming giant Novomatic take majority control of Ainsworth.

Novomatic has been meeting with investors in Sydney this week with a vote on the deal due to be held at an extraordinary general meeting on June 3.

That's what we want to hear. A promise to take them on.