Aristocrat Result | Metlifecare Takeover

21 November 2019

Global markets sold off overnight, as reports that the US and China are unlikely to reach a trade agreement this year saw markets extend losses. The report added pessimism after China threatened to retaliate for the US Sentate’s passage of a bill that sought to support Hong Kong’s protestors and HK’s autonomy from Beijing.

Stock in Focus: Aristocrat (ALL:ASX)

Aristocrat Leisure advanced 6% yesterday after reporting a strong full-year result, driven by an improved second half performance. The gaming company reported full-year normalised net profit after tax adjusted growth of 23%, ahead of the 17% growth it reported in the first half.

This result was driven by continued strong operational momentum across both Land-based and Digital businesses. Favourable currency movements and tax benefits also supported its result. The Americas segment delivered revenue growth of 14.2% to US$1,363.1m. This growth was supported by its Digital segment which posted a 24.1% increase in revenue to US$1,252.2m. It finished the period with 7.5 million daily active users, which were generating bookings per day of 41 U.S. cents per user. The Aussie & NZ segment delivered modest revenue growth of 0.2% to $455.2m. Acting as a drag on its result was the International segment. Lower Asia Pacific revenues led to the segment posting a 7.3% decline in revenue to $195.2m.
We remain positive on Aristocrat as a high-quality growth stock which is transitioning its business model into the online software as a service space.

We currently have a BUY rating on Aristocrat.
Members should look out for our full update on Aristocrat to be released in our weekly report.


Australia & New Zealand Market Movers

The Australian market sold off yesterday (-1.35%) as the big banks led the declines, wiping a combined $9 billion from the boards, after AUSTRAC alleged Westpac engaged in widespread, systemic and frequent failures to adhere to anti-money-laundering laws and terrorism financing. The financial crimes regulator alleged there were more than 23 million contraventions of the law, related to money coming in and out of Australia from Europe and Asia. NAB said in its annual report last week it was facing an AUSTRAC investigation that could result in "serious" penalties but it was too early to quantify them. Webjet shares soared after reporting strong performances from its WebBeds and Webjet online travel agency businesses at its annual general meeting. The company also forecast its underlying earnings for fiscal 2020 would be up as much as 34% on fiscal year 2019.

The New Zealand market made gains on Wednesday (+0.76%) led higher by Metlifecare (up +13%) after the retirement village operator said it had attracted a takeover offer from a credible buyer, although the Metlifecare board believe the offer is too low. A2 Milk made solid gains for the second day, following their earnings upgrade on Tuesday. Chorus extended its gain as well post a favourable draft decision by the Commerce Commission on how it would create a regulated pricing regime for fibre operators. Insurance company Tower rose after returning to profit and signalling dividend payments will resume in the 2020 financial year. On the flipside, the power generator sector remained weak.


3 Things Markets Will be Watching this Week

  1. ​Trade related news-flow will remain important in terms of driving investor sentiment.
  2. Minutes from the last US Federal Reserve meeting are released on Wednesday.
  3. Minutes from the last Reserve Bank of Australia meeting are released on Tuesday.


Have a Great Day,


Global markets sold off overnight, as reports that the US and China are unlikely to reach a trade agreement this year saw markets extend losses.

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