• Top ASX 200 gaming share on watch after half year update

    technology shares

    The Aristocrat Leisure Limited (ASX: ALL) share price could be on the move this morning following the release of the gaming technology company’s half year results.

    How did Aristocrat Leisure perform in the first half?

    For the six months ended March 31, Aristocrat posted a 7% increase in operating revenue to $2,251.8 million. This was driven by a 27.3% increase in Digital segment revenue to $1,044.6 million, which offset declines in its Land-based segments.

    However, due to the lower share of Land‐based revenue because of COVID‐ 19 impacts and its investments in user acquisition for its Digital portfolio, the company’s EBITDA margin fell 5 percentage points to 31.4%.

    This led to normalised EBITDA falling 7.7% on the prior corresponding period to $707.6 million and normalised NPATA dropping 12.8% to $368.1 million.

    On a reported basis, NPATA jumped 232.1% to $1,367.4 million. This was due to a one-off ~$1 billion deferred tax benefit. This follows group structure changes announced in November 2019, which are expected to generate long term cash tax savings.

    As was widely expected, Aristocrat has decided to suspend its dividend in order to enhance its liquidity position and balance sheet.

    Land-based segment.

    During the half, Aristocrat’s Class III Premium installed base grew 9.4% and its Class II installed base grew 1.8%.

    Management notes that this was driven by continued penetration of leading hardware configurations and high-performing game titles.

    Its market-leading average fee per day (pre-COVID-19 casino closures) increased 0.3% to US$50.20. On an unadjusted basis, the average fee per day for the period was just above US$46.

    Digital segment.

    The growing Digital business was the star of the show during the half. It delivered double-digit growth in bookings, revenue, and profit during the half.

    The RAID: Shadow Legends game was a highlight, continuing its impressive growth trajectory by generating US$160 million in bookings over the six months. This was supported by additional targeted user acquisition (UA) investment.

    Speaking of which, the company’s total UA spend grew to 29% of Digital revenue in the period. This was due to the availability of quality investment opportunities.

    Another big positive was its growth in Average Bookings Per Daily Active User (ABPDAU). It grew over 30% to US$0.50 due to management’s successful focus on monetisation and the scaling of RAID: Shadow Legends.

    Management commentary.

    Aristocrat’s chief executive officer and managing director, Trevor Croker, was pleased with how the company performed given the challenging trading conditions.

    He commented: “Aristocrat delivered a result for the half year to 31 March 2020 that demonstrates our core strengths and the relevance of our product-led strategy, despite the unprecedented challenges generated by the COVID-19 pandemic.”

    “Our progress in driving share through outstanding product and diversifying revenue streams – including across attractive Digital genres and titles – are also evident in this result,” he added.

    Looking ahead, the chief executive remains focused on growing the business when trading conditions improve.

    He said: “We will also continue to drive our strategic advantages in product, with aggressive investment in our core growth engines of Design and Development and User Acquisition to target share and continue to diversify our portfolios.”

    “In Land-based, we will execute our ambitious plans to partner and grow with our customers as conditions improve. And in Digital, we will accelerate execution of our portfolio-based growth strategy as we further mature and scale the organisation,” Croker added.

    No guidance was given for the second half, which is understandable given the current environment.

    I think Aristocrat would be a great long term option along with the five dirt cheap shares which are recommended below…

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • Why I’d invest $1,000 in this ASX tech share today

    Woman standing in front of computerised images, ASX tech shares

    ASX tech shares have not all enjoyed the same fortune in 2020. While the S&P/ASX 200 Index (ASX: XJO) has slumped 16.62% this year, investors have struggled to value many of our largest listed technology companies.

    We’ve seen the Afterpay Ltd (ASX: APT) share price rocket from a 52-week low of $8.01 per share to a new 52-week high of $43.68 in the space of a couple of months. I think a 445% share price increase in such a short space of time means the ship may have sailed on Afterpay for now.

    However, if you’re looking for ASX tech shares that are good value today, check out one of my top picks below.

    Why this ASX tech share is in the buy zone

    Let’s ignore the big winners in 2020 like Afterpay and NextDC Ltd (ASX: NXT) for just a moment. While their recent gains are good news for shareholders, the rest of us may be experiencing a bit of FOMO!

    That’s why I’m focusing on what could be ‘the next Afterpay’. Sitting at the top of my list is one of my favourite ASX tech shares, Xero Limited (ASX: XRO).

    Xero shares haven’t crashed lower in 2020 and are actually outperforming the ASX 200 by quite a margin. Whilst the Xero share price has only edged 0.20% higher this year, it has been far less volatile than many of its ASX 200 cohorts. 

    It’s true that the ASX tech share is already highly valued. However, I don’t think this means it can’t continue to grow well into the future. Xero is still continuing to sign large clients and I can see demand for its services increasing in the current climate. Businesses need to carefully manage their obligations under government stimulus programs like JobKeeper and Xero’s platform is perfect for just that.

    Foolish takeaway

    Xero shares have been holding their value in 2020. That’s a real plus for investors given it is a highly valued growth share. Despite the fact some believe it is currently overvalued, I like Xero’s prospects this year and think we could see a solid earnings result in August 2020. Therefore, I still like this share for adding some growth potential to a diversified portfolio.

    If you’re after another top ASX growth prospect in 2020, check out this all-in buy alert today!

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    Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • China’s Got a New Plan to Seize the World’s Tech Crown From the U.S.

    China’s Got a New Plan to Seize the World’s Tech Crown From the U.S.(Bloomberg) — Beijing is accelerating its bid for global leadership in key technologies, planning to pump more than a trillion dollars into the economy through the rollout of everything from wireless networks to artificial intelligence.In the masterplan backed by President Xi Jinping himself, China will invest an estimated $1.4 trillion over six years to 2025, calling on urban governments and private tech giants like Huawei Technologies Co. to lay fifth generation wireless networks, install cameras and sensors, and develop AI software that will underpin autonomous driving to automated factories and mass surveillance.The new infrastructure initiative is expected to drive mainly local giants from Alibaba and Huawei to SenseTime Group Ltd. at the expense of U.S. companies. As tech nationalism mounts, the investment drive will reduce China’s dependence on foreign technology, echoing objectives set forth previously in the Made in China 2025 program. Such initiatives have already drawn fierce criticism from the Trump administration, resulting in moves to block the rise of Chinese tech companies such as Huawei.“Nothing like this has happened before, this is China’s gambit to win the global tech race,” said Digital China Holdings Chief Operating Officer Maria Kwok, as she sat in a Hong Kong office surrounded by facial recognition cameras and sensors. “Starting this year, we are really beginning to see the money flow through.”The tech investment push is part of a fiscal package waiting to be signed off by China’s legislature, which convenes this week. The government is expected to announce infrastructure funding of as much as $563 billion this year, against the backdrop of the country’s worst economic performance since the Mao era.The nation’s biggest purveyors of cloud computing and data analysis Alibaba Group Holding Ltd. and Tencent Holdings Ltd. will be linchpins of the upcoming endeavor. China has already entrusted Huawei to galvanize 5G. Tech leaders including Pony Ma and Jack Ma are espousing the program.Maria Kwok’s company is a government-backed systems integration provider, among many that are jumping at the chance. In the southern city of Guangzhou, Digital China is bringing half a million units of project housing online, including a complex three quarters the size of Central Park. To find a home, a user just has to log on to an app, scan their face and verify their identity. Leases can be signed digitally via smartphone and the renting authority is automatically flagged if a tenant’s payment is late.China is no stranger to far-reaching plans with massive price tags that appear to achieve little. There’s no guarantee this program will deliver the economic rejuvenation its proponents promise. Unlike previous efforts to resuscitate the economy with “dumb” bridges and highways, this newly laid digital infrastructure will help national champions develop cutting-edge technologies.What BloombergNEF SaysChina’s new stimulus plan will likely lead to a consolidation of industrial internet providers, and could lead to the emergence of some larger companies able to compete with global leaders such as GE and Siemens. One bet is on industrial internet-of-things platforms as China aims to cultivate three world leading companies in this area by 2025.Nannan Kou, head of researchClick here for researchChina isn’t alone in pumping money into the tech sector as a way to get out of the post-virus economic slump. Earlier this month, South Korea said AI and wireless communications would be at the core of it its “New Deal” to create jobs and boost growth.According to the government-backed China Center for Information Industry Development, the 10 trillion yuan ($1.4 trillion) that China is estimated to spend from now until 2025 encompasses areas typically considered leading edge such as AI and IoT as well as items such as ultra-high voltage lines and high-speed rail.Separate estimates by Morgan Stanley put new infrastructure at around $180 billion each year for the next 11 years — or $1.98 trillion in total. Those calculations also include power and rail lines. That annual figure would be almost double the past three-year average, the investment bank said in a March report that listed key stock beneficiaries including companies such as China Tower Corp., Alibaba, GDS Holdings, Quanta Computer Inc. and Advantech Co.Beijing’s half-formed vision is already stirring a plethora of stocks, a big reason why five of China’s 10 best-performing stocks this year are tech plays like networking gear maker Dawning Information Industry Co. and Apple supplier GoerTek Inc. The bare outlines of the masterplan were enough to drive pundits toward everything from satellite operators to broadband providers.It’s unlikely that U.S companies will benefit much from the tech-led stimulus and in some cases they stand to lose existing business. Earlier this year when the country’s largest telecom carrier China Mobile awarded contracts for 37 billion yuan in 5G base stations, the lion’s share went to Huawei and other Chinese companies. Sweden’s Ericsson got only a little over 10% of the business in the first four months. In one of its projects, Digital China will help the northeastern city of Changchun swap out American cloud computing staples IBM, Oracle and EMC with home-grown technology.It’s in data centers that a considerable chunk of the new infrastructure development will take place. Over 20 provinces have launched policies to support enterprises utilizing cloud computing services, according to a March note from UBS Group AG. Tony Yu, chief executive officer of Chinese server maker H3C, that his company was seeing a significant increase in demand for data center services from some of the country’s top internet companies. “Rapid growth in up-and-coming sectors will bring a new force to China’s economy after the pandemic passes,” he told Bloomberg News.From there, more investment should flow. Bain Capital-backed data center operator Chindata Group estimated that for every one dollar spent on data centers another $5 to $10 in investment in related sectors would take place, including in networking, power grid and advanced equipment manufacturing. “A whole host of supply-chain companies will benefit,” the company said in a statement.There’s concern about whether this long-term strategy provides much in the way of stimulus now, and where the money will come from. “It’s impossible to prop up China’s economy with new infrastructure alone,” said Zhu Tian, professor of economics at China Europe International Business School in Shanghai. “If you are worried about the government’s added debt levels and their debt servicing abilities right now, of course you wouldn’t do it. But it’s a necessary thing to do at a time of crisis.”Digital China is confident that follow-up projects from its housing initiative in Guangzhou could generate 30 million yuan in revenue for the company. It’s also hoping to replicate those efforts with local governments in the northeastern province of Jilin, where it has 3.3 billion yuan worth of projects approved. These include building a so-called city brain that will for the first time connect databases including traffic, schools and civil matters such as marriage registry. “The concept of smart cities has been touted for years but now we are finally seeing the investment,” said Kwok.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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  • Financial statement inaccuracy

  • PFE | Pfizer and German partner BioNTech SE said Tuesday they’ve begun delivering doses of their coronavirus vaccine to US candidates with trials in Germany already underway.

  • PFE | Pfizer and German Parker BioNTech SE have begun delivering doses of their coronavirus vaccine for human testing US, trials in Germany already underway.

  • The performance outlook of tech companies.