Ainsworth Gaming Technology Remains Undervalued Despite Persistent Domestic Woes

We reduce our fair value estimate to AUD 1.14, from AUD 1.20 previously, for shares in narrow-moat Ainsworth Game Technology, following the release of its fiscal 2019 results. While the 36% fall in underlying EBITDA to AUD 43 million was in line with our prior forecasts, the near-term outlook appears to be more challenging for the smaller domestic segment than we anticipated. Ainsworth continues to falter in Australia and we lower our domestic margin forecasts from fiscal 2020. Despite the reduction in our fair value estimate, we continue to see value in Ainsworth at current depressed prices. The key North American business remains strong. Ship-share losses have virtually stopped, revenue continues to increase year on year, and new game approvals are progressing.