Both Aristocrat Leisure Ltd and Ainsworth Game Technology Ltd are well positioned for growth in the US market, according to a recent report from J.P. Morgan Australia.
The report followed the release of data from the completion of their 7th Annual US Slot Market Survey.
“Aristocrat looks set to be the key beneficiary, with 66 percent of participants saying the company is the top performing manufacturer,” said J.P. Morgan analysts. The survey also revealed that 57 percent of casinos intended to increase their floor allocation for Aristocrat products by 5 percent.
JP Morgan also said that Ainsworth is gaining traction, however at a slower rate than its competitor. “Ainsworth should also grow sales as its profile builds – purchasers are likely to devote 6.2 percent of a new floor to Ainsworth, up from 2015 (5.2 percent),” analysts added.
The report also adds that Bally and Konami are performing well in terms of current performance and gaining share, followed by IGT and Ainsworth.
The report also noted the increased reliance that poker machine manufacturers will have on the replacement market in the US now that the rate new casinos opening have slowed. “As a result, slot manufacturers will be increasingly reliant on the replacement market. In our latest survey, 66 percent of casinos report they will maintain spend on replacements [in 2016], 17 percent intend to increase spend and 6 percent will see a large increase in their replacement budget.”
Aristocrat Leisure says it will focus on expanding its existing operations, rather than chasing new “bolt-on” acquisitions such their acquisitions of US group Video Gaming Technologies in 2015 and Product Madness in 2012.
Chief executive Jamie Odell was quoted by Fairfax Media last week as saying he was wary of turning the company into a ‘deal machine’. “We are aware we’ve done two great pieces of M&A with Product Madness and more recently VGT, but we really don’t want to become deal junkies and we can’t,” said Odell. “The majority of our shareholders really see us as a growth vehicle. We’ve got great cash flows at the moment which we’re very proud of and it gives us flexibility,” he added.
Odell also said he will be keeping a close watch on the pending deal which could see Ainsworth Game Technology handed over to Novomatic, which would give Ainsworth a stronger platform in both Australia and North America.