As per the latest budget details, government has enhanced the funding to Tourism sector and this is expected to help Australia maintain a competitive edge as a tourism destination benefitting from high quality and diverse visitor experience into the future. With this in mind, few entertainment and leisure stocks may take a sweet spot.

Crown Resorts Limited

CWN Details

Poised for Growth:Crown Resorts Limited (ASX: CWN) is expected to return to improved growth levels with support emanating from its entertainment and casino units. Further, Crown Sydney is expected to add to earnings upon completion. Lately, the group updated the market about the buy-back of the outstanding Subordinated Notes that were listed on ASX. It reported that as on 04 May 2018, a cumulative total of 1,323,175 of Notes were bought back and about 3,996,525 of Notes were still outstanding which still have not been bought back. On the other hand, CWN’s Australian operations’ in the first half 2018 reflected mixed trading conditions. Total normalised revenue in 1H 2018 across Crown’s Australian resorts grew by 4.8% on the prior comparable period. For 1H 2018, the Normalised NPAT attributable to the parent grew 0.6% to $192.4 million but Reported NPAT attributable to the parent fell 33.65% to $238.6 million after significant items. Besides this, the Group has appointed John Poynton to the Board as a Director.

 
1HFY18 Financials (Source: Company Reports)
 
Meanwhile, the share price has been up by 9.55 per cent in the past six months as on May 09, 2018. Given the decent underlying fundamentals, we continue to maintain our positive stance on the stock and believe that the near-term prospect in relation to Federal Budget might help the stock gain momentum going forward. We recommend to “Hold” the stock at the current market price of $ 13.32.
 

CWN Daily Chart (Source: Thomson Reuters)
 

Aristocrat Leisure Limited

ALL Details

Focused on delivering long-term value creation: Aristocrat Leisure Limited (ASX: ALL) is diversified across multiple attractive gaming segments and has incumbent or growing position in each of its portfolio businesses, consistently taking share in its markets whether stable or growing. Its operating model supports long-term growth and value creation. The Group’s operating model has positioned it to innovate and grow its core, enter adjacencies, make disciplined acquisitions, and re-invest in its business both organically and inorganically. It has expanded its digital portfolio to popular social gaming genres with digital-first and Meta game capabilities. Continued investment and execution of its business strategy has resulted in strong earnings growth and cashflow generation in recent years. It adopted a multi-channel approach for content commercialisation. Growth in social casinos is driven by Meta games. Meta-structure driven applications occupy a uniquely differentiated segment of the social casino market and represent a significant and rapidly growing market opportunity.

Global social casino segmentation (Source: Company Reports)

On the other hand, the group has recently outlined its statement on Kater Litigation. This litigation was related to the operation of the online social gaming platform Big Fish Casino, which is part of Big Fish Games, Inc., acquired by ALL lately. Moreover, Aristocrat agreed that there are meritorious legal and factual defences against the Plaintiff’s allegations and requests for relief and Aristocrat is not aware of any other US Court having expressed an opinion similar to that of the court in this action. Meanwhile, Commonwealth Bank of Australia and its related bodies corporate ceased to be a substantial holder of the group since April 27, 2018. The stock climbed up by 16.92 per cent in the past three months as on May 09, 2018 and is trading at a high level. Hence, we continue to maintain our “Expensive” recommendation on the stock at the current market price of $ 28.060.
 

ALL Daily Chart (Source: Thomson Reuters)

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