Aristocrat and Ainsworth Appear Attractive Following Market Sell-Off

As a result of the current market rout, narrow moat Aristocrat Leisure now trades at a meaningful discount to our unchanged fair value estimate of AUD 27.50 per share, and narrow moat Ainsworth trades at an even deeper discount to our intact fair value estimate of AUD 1.10 per share. We expect the impact of COVID-19 to weigh on the firms' near-term earnings as customers reduce capital expenditure to protect balance sheets amid shutdowns of nonessential public venues--including clubs and casinos. But our fair value estimates are intact as we expect the impact to be short term. Our long-term earnings forecasts are largely unchanged and the time value of money offsets the lower near-term earnings outlook.