Aristocrat Earnings: While Tailwinds in Online Gaming Are No Longer Blowing, EGMs Remain Resilient

We maintain our AUD 43 fair value estimate for shares in Aristocrat following the release of interim fiscal 2023 earnings. Underlying net profit of AUD 659 million is up 14% on the prior corresponding period, or pcp. Strong performance in the core electronic gaming machine, or EGM, business offset earnings weakness in Pixel United—Aristocrat's online gaming division. The net result was buoyed by sharply lower net interest costs (higher interest rates have benefited Aristocrat's net cash position) and favourable foreign currency translation. We lower fiscal 2023 underlying NPAT forecast by 2% to AUD 1.2 billion, principally due to the softer-than-expected Pixel United result. The board declared a fully franked interim dividend of AUD 30 cents per share, tracking our forecast for total fiscal 2023 dividends of AUD 64 cents per share, fully franked.