Ann: 2018 Investor Day Presentation, page-15

Update from Goldman Sachs regarding the Ainsworth profit downgrade:

Aristocrat Leisure (ALL.AX): Ainsworth Trading Upate: another positive data point for ALL’s ANZ business

We note a release from Aristocrat’s major competitor in the ANZ region, Ainsworth Game Techonology (AGI; Not Covered) suggesting that recent domestic salesexpectations have been “affected by a range of factors, including competitive activity” (a direct read across for ALL ’s ANZ business).

Furthermore, 2H18 profit before tax guidance has seen a significant reduction vs February 2017 (previously modestly ahead of 2H17 at A$42.2mn, with the company now guiding for “around A$20mn”).

We believe recent poor performance from Ainsworth is consistent with feedback during 1H18 reporting season from ANZ casino operators (Crown (CWN.AX), Star (SGR.AX) and SKC.AX) for the relatively strong performance of Aristocrat’s games. We believe Aristcorat’s ANZ business has continued to grow from an already strong market share position, driven by the roll out of Dragon link over last 12 months.

ANZ business forecasts (14% of FY18E segment profit):

We currently expect revenue growth of +3.3% in FY18E driven by unit salesn growth of +2% to 14,655 in FY18E (+4% to 7 ,364 in 1H18) implying Aristocrat will take c.70% of ship share in FY18E. We currently expect a broadly flat fee per day, with the remainder of top line growth coming from software sales.

Our segment profit forecast for FY18 is for growth of +16% to A$220mn. (FY16:n +48.6%; FY17: +12.7%).

AGI Trading Update:

Domestic sales expectations for H2FY18 have been adversely affected by an range of factors, including competitive activity, regulatory approval delays in product submissions and further product development changes which have deferred the approval and release of previously scheduled key game titles until H1FY19.

Nth America unit sales expected to be flat vs pcp.

Valuation, risks

We remain Buy-rated (on Conviction List) on Aristocrat. Our unchanged 12-month target price of A$30.70 continues to be based on FY19E SOTP valuation methodology. Key risks: US competition, slowdown in gaming market and FX.