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US – AGEM Index reaches a record high in April

By - 10 May 2017

The AGEM Index reached another record high in April, continuing the momentum from previous months.

The composite index stood at 371.50 points at the close of April 2017, which represents an increase of 10.22 points, or 2.8 percent, when compared to March 2017. The AGEM Index reported a year-over-year increase for the 19th consecutive month, rising 144.99 points, or 64.0 percent, when compared to April 2016.

During the latest period, nine of the 13 global gaming equipment manufacturers reported month-to-month increases in stock price, with two up by more than 10 percent. Three manufacturers reported decreases in stock price during the month and one manufacturer posted a flat performance.

The broader stock markets produced mixed results in March. The S&P 500 reported a slight month-to-month increase, rising 0.09 percent to 2,384.20. Additionally, the Dow Jones Industrial Average increased 1.3 percent to 20,940.51, while the NASDAQ increased 2.3 percent during the period to 6,047.61.
Selected positive contributors to the April 2017 AGEM Index included the following:

Aristocrat Technologies (ALL) contributed 8.85 points due to a 9.29 per cent increase in stock price to AU$19.64.

Crane Co. reported a 6.79 per cent increase in stock price to $79.91 and contributed 4.18 points.

Everi Holdings (EVRI) contributed 1.77 points due to a 32.57 per cent increase in stock price to $6.35.

With its stock price falling 6.33 per cent to $22.20, International Game Technology (IGT) contributed negative 3.68 points.

Konami Corp. (contributed negative 1.47 points to the index due to a 1.9 per cent decline in stock price to ¥4,635.

A number of global gaming suppliers have identified the State of Nevada as key market for manufacturing operations and back-office support. The southern portion of the state, which includes the Las Vegas area, continues to make strides in capturing the attention of the supplier industry. Aristocrat Technologies recently entered into an arrangement with Summerlin, a premier master planned community in Las Vegas, for the development of a new multi-building campus.

Howard Hughes Corporation, developer of Summerlin, revealed plans for two buildings near Hualapai Way and the Interstate-215 comprising of 180,000 square feet of space dedicated for Aristocrat. Construction on the project is expected to proceed in the second quarter of 2017 with an expected completion date of late 2018. The facilities will accommodate 600 employees who are currently spread among different buildings in the Las Vegas area. Aristocrat has signed a 15-year build-to-suit lease agreement, and the project is expected to cost approximately $45 million, exclusive of land costs.

Aristocrat joins several other manufacturers, including International Game Technology, Scientific Games Corporation and Ainsworth Game Technology, with offices in the southwestern region of the Las Vegas area. Both Ainsworth and Aristocrat are based in Australia while Las Vegas serves as the headquarters for Ainsworth’s North American operations.

With the addition of a centralized campus for Aristocrat, gaming manufacturers continue to value a presence in Las Vegas and solidify the city as one of the centers for innovation in the gaming manufacturing market.

In other recent news, IGT is proceeding with the sale of its social casino subsidiary. IGT is expected to sell Double Down Interactive LLC to DoubleU Games Co. Ltd, a Seoul-based affiliate, in the second quarter of this year. The sale price of $825 million represents a 10.5 times multiplier on the 2016 adjusted earnings figures of the subsidiary.

IGT made the announcement on April 18, 2017, citing the need to deleverage the balance sheet and capitalize on the recent valuation. IGT originally purchased Double Down for $500 million in 2012 but has seen revenues and daily active users decline in the most recent year. As part of the agreement, DoubleU will be able to license and offer IGT’s social games on its platforms while paying royalties to IGT. IGT’s stock has responded positively during the second half of the month of April.

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