What does the future hold for AGI?

Shareholders have had to sit through several years of the present CEO and his downbeat financial forecasts. There has been almost no positivity at company meetings in relation to the company’s prospects. Forward guidance has been rare at best. Every year has seen a different excuse for why dividends won’t be paid again. It makes a shareholder very suspicious as to what the board and management’s true intentions are!

Yet in the media we’ve seen a completely different approach. In the media we’ve seen a constant flow of optimistic, upbeat articles discussing the bright future for AGI’s products around the world. Who to believe?

The past few months have seen a lot of market intelligence gathering on our part. We wanted to get to the bottom of how the company’s products are performing. Communication with shareholders has seen many whistleblowers come forward. Real people working in the business, supplying the business, formerly employed by the business; and long standing shareholders. I’ve also had the opportunity to spend a few weeks in Las Vegas visiting casinos and to send analysts out into the field in Australia to speak with club and casino floor managers.

This is what is really going on with the AGI product out in the field that is not being told to shareholders.

In Australia, the Raptor cabinet, depending on the club or casino you visit, is beating all but one of the competitor products. It is coming a close second in terms of profitability to the market leading product. One senior sales person at Ainsworth described to me the Raptor product being 40% ahead of budget in many locations. Another casino floor manager told my analyst the Raptor was ahead of all but one competitor by approximately 20% in revenue. Perhaps this explains the big revenue increases in Australia in the Half Yearly results?

Another person described the previous Australian AGI game cabinet as being very ordinary. He described the new cabinet as excellent. He stated “the company is getting its old customers back that it hasn’t seen in many years due to the quality of the new product”.

I have walked the floors and spoken to staff at many off and on strip casinos in Las Vegas in the past three months. I have seen at least one installation of the Raptor cabinets in carousel formation in each of the major casinos. The machines are popular with players. The floor staff I spoke with all spoke highly of the Raptor cabinet and the game choices. It is undoubtedly the best looking machine and one of the most profitable machines on the market at present.

The recent half year revenue figures matched with the casino and club level intel suggests AGI is on a tear and set for some seriously impressive growth.

I couldn’t think of a better, more undervalued business to invest in at present. This is not financial advice; it is simply a research based opinion on the future prospects for this business, based on 30 years of value investing experience.