With mixed stock performances for major gaming suppliers during the month of August, the AGEM Index increased 5 percent over the previous month, posting a value of 111.56, or an increase of 5.27 points. On a year-over-year basis, the AGEM Index is up 4.1 percent, recording its second consecutive monthly increase, the first time since March 2008. The gains and losses during August are primarily attributable to second quarter earnings reports. With nine of the 17 companies lifting upward during the month, eight others lost ground in terms stock valuation. The top five contributors to the index included: (1) International Game Technology (IGT), leading the pack for the second month in a row, adding 1.88 points to the index based on a 5.92-percent increase in its stock valuation; (2) WMS Industries (WMS), posting 1.87 points to the index due to a significant 17.06-percent stock price increase; (3) Bally Technologies (BYI), contributing 1.32 points to the index driven by an 11.65-percent gain in its stock performance; (4) Lottomatica (LTO), which was up 5.66 percent adding 1.29 points; and (5) Aristocrat Technologies (ALL) rounded out the top five with a 3.12-percent price increase, contributing 0.53 points to the overall index.
Selected suppliers reporting negative contributions to the index included: (1) Global Cash Access (GCA), posting -0.52 points to the index based on a 19.44-percent decline in its stock valuation; (2) Astro Corp. (3064), reporting a 20.03-percent decrease in its stock valuation contributing -0.12 points to the index; and (3) Multimedia Games (MGAM), posting -0.07 points to the index due to a decrease of 10.68 percent in its stock valuation.
It is important to note that INTRALOT S.A. was added to the AGEM Index during the month of August. INTRALOT is a leading supplier of integrated gaming and transaction processing systems with a presence in 50 countries on five continents. Headquartered in Athens, Greece, their stock is publicly traded on the Athens Stock Exchange.
Union Gaming Group Analysis
Gaming suppliers’ momentum continues through August helped by improving sentiment given relative stability on a macro basis. Improving dynamics in the casino and supplier sub-sectors particularly underscored the relative strength. We saw good news at the state level during August, improving dynamics in Asia, sector earnings that demonstrated stability in gaming (MGM MIRAGE, Boyd Gaming, Melco-Crown, WMS, Bally Technologies, Ameristar, and Aristocrat), and capital markets activity such as capital raises and debt amendments that resulted in balance sheet improvement (Las Vegas Sands, Melco-Crown). Collectively the sector got healthier in August. Here is a laundry list of activity that contributed: Ohio’s Supreme Court validated the casino initiative signatures while the measure gained some important local support. Ohio’s Lottery Commission also approved VLT rules. In Pennsylvania, the House Majority leader pegged table game expansion at 70 percent likelihood, while Penn National’s Charles Town Races pursues voter approval for tables. At the end of August, compact momentum between Seminoles and Florida gathered steam, also providing for prospective table expansion. Massachusetts announced financial legislation which should lay the ground work for gaming expansion. Amendment 50 seems to be working in Colorado, driving outsized gaming revenue performance, while a battle to build and operate a racino at Aqueduct rages. In Asia commission caps were approved in Macau and visa restrictions were anticipated to lift in early September. These favorable structural changes should accrue to casino operators in the region ultimately enabling healthier capital expenditure dynamics. Taiwan set its first casino referendum for the end of September as it looks to offer casino gaming. This momentum has continued into early September and we are cautiously optimistic about the fundamental improvement in 4Q09.
About AGEM
AGEM is an international trade association representing manufacturers of electronic gaming devices, systems and components for the gaming industry. The association works to further the interests of gaming equipment manufacturers throughout the world through political action, tradeshow partnerships, information discrimination and good corporate citizenship. Together, AGEM and its member organizations have 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 services for public and private entities. The company provides a wide range of services, including urban economic consulting, financial advisory services, market analysis, public policy analysis, hospitality industry and gaming consulting, and information 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 and product services.
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