Ainsworth Shares Are Materially Overvalued As Restrictions Continue To Weigh on Profitability

With a swifter return to profitability anticipated for Ainsworth Game Technology, we lift our fair value estimate for the no-moat stock by AUD 0.02 to AUD 0.40 per share The firm reported an after-tax loss of AUD 50 million in the first half of fiscal 2021, compared with an AUD 4 million loss in the prior corresponding period. Underlying net loss was AUD 21 million after adjusting for AUD 29 million in impairments--mainly the Latin America business, which is grappling with a second COVID-19 wave during the half. Latin American gaming venues remain heavily restricted--owing to social distancing requirements amid the ongoing coronavirus pandemic--and Ainsworth's customers are keeping a tight rein on capital expenditure, deferring purchasing decisions.