Investors continued to find strength in global gaming suppliers, raising the majority of the AGEM Index members’ stock valuation during the month of September 2009. By the end of September, the AGEM Index posted a value of 116.78, an increase of 5.22 points or 4.7 percent over the prior month. The rise modestly outpaced the Standard & Poor’s 500, which managed to close the month with a 3.6-percent increase. On a year-over-year basis, the AGEM Index is up 26.8 percent, regaining territory from the catastrophic declines across equity markets last September following the collapse of Lehman Brothers and the largest single day point decline in the Dow Jones Industrial Average. The majority of global gaming suppliers are once again seeing year-over-year gains in their stock valuations. Selected positive contributors to the index during the month included: (1) Aristocrat Technologies (ALL), adding 2.23 points to the index with a 13.64-percent increase in its stock valuation; (2) International Game Technology (IGT), contributing 0.87 points to the index driven by a 2.68-percent gain in its stock performance; (3) Shuffle Master (SHFL), up 24.27 percent, adding 0.63 points to the index; (4) WMS Industries contributing 0.61 points to the index driven by a 5.27-percent gain in its stock price; and (5) INTRALOT S.A. (INLOT) adding 0.51 points to the overall index with a 7.05-percent improvement in its stock performance.
Negative contributions to the index were modest but a few selected suppliers on the list included: (1) Bally Technologies (BYI), with a 5.10-percent decline in its stock value, contributing -0.55 points to the index; (2) Lottomatica (LTO) posting -0.08 points to the index based on a 2.42-percent decline in its stock performance; and (3) GameTech International (GMTC) reporting a 10.94-percent drop in its stock valuation contributing -0.01 points to the overall index.
Momentum has continued to flourish since the stock market rally began this spring and the recession declared “very likely over” in September. Nevertheless, the ability for global gaming suppliers to strengthen over the long-term will come from new business in emerging markets and innovation in mature regions.
Union Gaming Group Analysis
In what is traditionally a strong month in the broader market, September 2009 would be considered textbook with gains across all major indices. Market strength was driven by favorable manufacturing and consumption data supporting the “green-sho
ots” of recovery notion. Gaming suppliers directionally followed, yet outperformance of broader markets in September was likely due to a confluence of events. These underscored gaming expansion and operating improvement for the sector while property transactions, capital markets activity, and evide
nce of Las Vegas stabilization collectively bolstered sentiment for the entire gaming group. We list a number of gaming expansion data points below, yet more importantly for investors’ was September’s evidence of healthier casino operators, which is indicative of a long awaited replacement cycle
drawing nearer—and investors are beginning to “pay” for this now. Expansion reared its head in various ways: Seminoles signed their Florida compact as did the Pomos in California; Miami-Dade tracks took delivery of slots; Oregon Lottery is adding/replacing slots; Greenbrier got licensed; Pennsylvania table game
expansion progressed; Sands wants more slots in Pennsylvania; Crown was approved for e-tables; Massachusetts gaming looked more probable; Maryland issued its first slots license; and Aqueduct racino inched ahead. On the financial front, Harrah’s continued to chop away at debt with successful exchan
ge offers; Wynn launched its HK IPO at premium valuation; SugarHouse closed on Philly project financing; Revel AC may be progressing with financing talks; and SJM issued an attractive convert. SHFL beat numbers and we suspect 2010 estimates may prove conservative. Macau posted a record August, e
vidence of visa restrictions easing, while Harrah’s, the Chickasaws, and PENN appeared active on the suitor front (Thistledown, Planet Hollywood, Remington, Lone Star, and Fontainebleau LV). While Taiwan’s first county referendum for casinos was voted down the aforementioned momentum was overwhe
lming. This dynamic has continued into October.
About AGEM
AGEM is an international trade association representin
g manufacturers and suppliers of electronic gaming devices, systems, table games, key components and support products and services for the gaming industry. The association works to further the interests of gaming equipment suppliers throughout the world. Through political action, tradeshow partnerships,
information dissemination and good corporate citizenship, the members of AGEM work together to create benefits for every company within the organization. Together, AGEM has assisted regulatory commissions and participated in the legislative process to solve problems and create a positive business environment.
AGEM Index and Overview
The AGEM index and overview is prepared by Applied Analysis (AA). AA is a Nevada-based advisory services firm providing a wide range of consultation service
s for public and private entities. The company utilizes extensive experience in economics, information technology and finance to provide a wide range of services, including urban economic consulting, financial advisory services, market analysis, public policy analysis, hospitality industry and gaming consulting and info
r
mation system and technology consulting.
Industry Analysis
Industry Analysis is prepared by Union Gaming Group (UGG). UGG is an independent research firm, government and industry advisor, focusing on the global
gaming business. UGG provides research, access and advisory services and offers varying levels of research products and services, which capitalize on UG’'s relationships with corporate managements, governments, and other parties relevant to the global gaming business.
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