AGEM releases June 2015 index

10 July 2015

(PRESS RELEASE) -- The AGEM Index fell to 192.28 in June 2015, which represents a decline of 4.70 points (-2.4 percent) compared to the prior month. The latest performance represents the second consecutive month-to-month decline after the composite index fell 3.70 points (-1.8 percent) in May 2015. Despite falling in recent months, the AGEM Index witnessed its fourth consecutive year-over-year gain in June 2015, rising 6.94 points (+3.7 percent).

During the latest period, five of the 13 global gaming equipment manufacturers reported gains in stock price. However, most of these gains were relatively modest, with four up by less than 3 percent. The one standout was Daktronics, Inc. (DAKT), which pushed north 10 percent. Of the eight manufacturers that reported declines in stock price, one was down by 17 percent, while another fell 36 percent.

The broader stock markets reported similar trends in June 2015. The Dow Jones Industrial Average ended the month at 17,619.51, which represents a decline of 2.2 percent compared to May. In addition, the S&P 500 fell 2.1 percent to 2,063.11, while NASDAQ fell 1.6 percent to 4,986.87.

Selected positive contributors to the June 2015 AGEM Index included the following:
—Daktronics (DAKT) contributed 0.61 points, due to a 10.0-percent increase in stock price to $11.86.
—Scientific Games Corporation (SGMS) reported a stock price of $15.54 (+2.1 percent) and contributed 0.33 points.

Selected negative contributors included the following:
—Aristocrat Technologies (ALL) reported a stock price of AU$7.65 (-1.9 percent) and contributed negative 2.30 points to the index.
—With a stock price of AU$2.57 (-17.1 percent), Ainsworth Game Technology (AGI) contributed negative 1.45 points.
—Crane Co. (CR) contributed negative 1.20 points, due to a 3.0-percent decline in stock price to $58.73.

AGEM Exchange: Symbol Stock Price At Month End Percent Change Index
(Currency) Jun-15 May-15 Jun-14 Prior Period Prior Year Contribution
Ainsworth Game Technology ASX: AGI (AU$) 2.57 3.10 3.74 (17.10) (31.28) (1.45)
Aristocrat Technologies ASX: ALL (AU$) 7.65 7.80 5.26 (1.92) 45.44 (2.30)
Astro Corp. Taiwan: 3064 (NT$) 30.20 30.75 39.45 (1.79) (23.45) (0.02)
Crane Co. NYSE: CR (US$) 58.73 60.53 74.36 (2.97) (21.02) (1.20)
Daktronics, Inc. Nasdaq: DAKT (US$) 11.86 10.78 11.92 10.02 (0.50) 0.61
Galaxy Gaming Inc. OTCMKTS: GLXZ (US$) 0.16 0.25 0.45 (36.00) (64.44) 0.00
Gaming Partners International Nasdaq: GPIC (US$) 10.11 10.39 8.16 (2.69) 23.90 (0.03)
Global Cash Access NYSE: GCA (US$) 7.74 7.73 8.90 0.13 (13.03) 0.01
International Game Technology NYSE: IGT (US$) 17.76 18.09 15.91 (1.82) 11.63 (0.76)
INTRALOT S.A. ATHEX: INLOT (EUR) 1.70 1.66 2.02 2.41 (15.84) (0.01)
Konami Corp TYO: 9766 (¥) 2,276.00 2,325.00 2,239.00 (2.11) 1.65 0.11
Scientific Games Corporation Nasdaq: SGMS (US$) 15.54 15.22 11.12 2.10 39.75 0.33
Transact Technologies Nasdaq: TACT (US$) 6.68 6.51 10.36 2.61 (35.52) 0.02
Change in Index Value (4.70)
AGEM Index Value: May 2015 196.98
AGEM Index Value: June 2015 192.28

In Macau, the rapid decline in gross gaming revenue that plagued the market in the second half of 2014 has continued through the first half of 2015. In June, Macau reported gaming revenue of $2.2 billion, representing a drop of 36.2 percent year-over-year as well as the 13th straight month of decline and the 10th straight month of double-digit drops. Year-to-date, total gaming revenue of $15.2 billion is down 37.0 percent from 2014.

The downward trend has been linked to several factors, mainly an ongoing corruption investigation on mainland China that has curtailed the lucrative VIP gaming segment. In 2011, VIP baccarat play accounted for 72.9 percent of gross gaming revenue. Last year, that figure fell to 60.3 percent. In the first quarter of 2015 (latest available data), the share fell to 57.9 percent compared to 63.5 percent in the prior year period.

A partial smoking ban is also a factor in falling gaming revenues, as it limits smoking in casinos to designated lounges and VIP gaming areas. Gaming revenue declines could be exacerbated should the Macau government implement a full indoor smoking ban in the near future, as it has indicated it will do. Casino operators have asked for smoking lounges to remain legal. A decision is expected later this year.

While the overall trend in gaming revenue has been negative, slot machine revenue has reported mixed results. Slot revenue totaled $1.8 billion in 2014, which was relatively flat from 2013 and in contrast to the 2.6-percent drop in overall gross gaming revenue for the year. In the first quarter of 2015 (latest available data), slot revenue was down 26.3 percent year-over-year, though that decline was not as pronounced as the 36.5-percent fall in total gross gaming revenue. Slot revenue's share of total gaming revenue has increased to 4.5 percent, up from 3.8 percent in the first quarter of 2014.

Amid Macau's tumbling gaming numbers, the Chinese government recently relaxed visitation rules to its Special Administrative Region. The revised rules allow residents of mainland China to visit Macau twice a month instead of twice every 60 days. The revision also extended the maximum length of stay from five days to seven days.

Gaming revenue could see a boost over the next two years as six properties are due to open by the end of 2017. However, new casinos could be hindered by Macau's cap on live table games, which limits annual growth in the number of tables to 3 percent. New properties are planning to add between 400 and 500 tables, but those numbers could be optimistic given the recently opened Galaxy Macau Phase 2, which was granted only 150 tables after requesting 400. The table game cap could spur greater installation of slot machines along with continued expansion of stadium-style electronic table game (ETG) areas. Live dealer ETG multigame areas allow casinos to operate dozens of gaming terminals that count only as a single table game for regulatory purposes. The industry abroad is continuing to evolve.

Related Links
Association of Gaming Equipment Manufacturers
Live Dealer Games
Daktronics, Inc. Gaming Vendor Information
Ainsworth Game Technology
Aristocrat Leisure Gaming Vendor Information
Aristocrat Technologies, Inc. Gaming Vendor Information

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