ALS: Resilience sets up a bright future

About the author:

Author name:

By Alexander Mees

Job title:

Co-Head of Research and Senior Analyst

Date posted:

17 November 2023, 7:00 AM

Sectors Covered:

Gaming and Retail

• FY23 earnings were broadly in line with consensus expectations. Revenue was slightly above forecast, but this was partly offset by the effect of increased design and development expenditure. FY23 NPATA was up 13.0% in constant currency terms to $1,327m, 3.9% above our forecast.
• Growth moderated in FY23, and we expect further moderation in FY24 as trading conditions normalise after the post-lockdown surge in demand for land-based gaming. We think the worst is over for Pixel United, though, and expect growth to turn positive in the years ahead. FY24F NPATA is largely unchanged at $1,382m. Our forecast implies constant currency growth of 1.6%.
• We retain an Add rating. Our target price comes down to (login to view), mainly due to the use of a higher weighted-average cost of capital (WACC). Aristocrat has significant long-term growth prospects, a high ROIC business model and a strong balance sheet.

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