In today’s daily we have covered stock research on Ainsworth Game Technology (Expensive).

To listen to our latest podcast on G8 Education click here

To view our recent recommendation on NEXTDC Click Here

To view our recent recommendation on Strike Energy Click Here


The S&P 500 was down 7.79points or 0.39%on Monday. U.S. stocks dipped on Monday, retreating from last week's record levels as investors were reluctant to make big bets before the start of earnings season. Expedia Inc. slid 1.7 percent after agreeing to make a $658 million acquisition. Peabody Energy Corp. fell 3.7 percent to lead energy producers lower. PetSmart Inc. gained 2.5 percent after a second large shareholder prodded the company to consider selling itself.

The CBOE Vix equity volatility index was up nearly 10% in late trade. European Stocks were unsettled by a weak set of German industrial production figures and the region wide FTSE Eurofirst 300 index fell 0.9%. Of 133 earnings pre-announcements from S&P 500 components so far, 97 have been negative, 24 positive and 12 in line with existing forecasts. Gold fell as low as $1,311 an ounce before rallying to stand just $1 lower at $1,319 in late trade.


CBOE VIX INDEX Hourly Chart (Source – Thomson Reuters)
 
S&P ASX 200was down by 6.1points or 0.11%on Monday and closed at 5518.9 points. NewSat (NWT) has announced a new Jabiru – 2 satellite capacity contract with a leading global satellite systems integrator. Guildford Coal has entered in to an underwriting agreement with Maiora Asset Management. Decmil Group (DCG) has been awarded a contract for Non-Process Infrastructure at Rio Tinto’s Cape Lambert Port Expansion. Pacific Brands chief executive John Pollaers has resigned. Aristocrat Leisure has announced that it has entered into an agreement to acquire North American based gaming machine provider Video Gaming Technologies. New Zealand’s biggest glass processor, Metro Performance Glass, is set to list in Australia and New Zealand by the end of July in a $NZ315 million ($294 million) float.

Shoply(SHP) has entered the growing online toy market currently valued at $86 million per annum in Australia with the launch of toystore.com.au. NAB has become a substantial shareholder of HFA Holdings Limited (6.65% Voting Power) and Challenger (5.097% voting power). US-based travel booking giant Expedia has launched a $3.30 a share bid for Wotif.com Holdings in a deal valuing the company at $703 million.

WOTIF Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:- 



Stock of the Day – Ainsworth Game Technology  (AGI)

AGI is an Australian Electronic Gaming Machine (EGM) manufacturer, selling products into North and South America, Asia and Australia. The company continues to grow earnings with the performance of the machines regularly exceeding expectations. AGI is in the expansion phase in the U.S where the growth trajectory is expected to be uneven. We saw this at the 1H14 result where 804 units were sold down from 825 in the previous corresponding period. 



AGI Financial Performance (Source – Company Reports)

Australia still accounts for 74% of EBIT and in our view, ship share continues to rise – we forecast 2H14 ship share of 27%, up from 24.5% in the previous corresponding period. The product continues to be the preferred purchase for most venues and we see some upside in the hotel space, which is currently underpenetrated by AGI.
 

AGI Floor share (Source – Company Reports)

 
There are a number of downside risks associated with AGI: 1) Weaker than expected ship share % in Australia and North America. 2) A downturn in replacement cycle in Australia and North America. 3) A downturn in discretionary consumption, including gaming expenditure, which will affect bthe buying intentions of casinos and other customers. 4) Unfavorable regulatory changes. 5) Significant changes to exchange rates.


AGI Revenue Contributions from market segments (Source – Company Reports)

In our view, AGI is experiencing growth from: 1) Additional sales in Victoria ( an underpenetrated market of AGI product). 2) Higher installed base of participation boxes in the U.S. We like the story but with a relatively fully valued share price and limited visibility of medium term earnings we believe the stock is expensive at its current price of $3.89 and would review the stock at a later date.

---

Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people.
Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).
The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation.
Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product.
The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide.