Chris Judd's Talk Ya Book Podcast · Chris Judd's Talk Ya Book

Anthony Kavanagh

February 14, 2024·20 min·1 clip

Light and Wonder's New South Wales share rose from single digits to closer to 30% over three years.

Reporting season sets the pace. Chris Judd opens with Anthony Kavanagh from Chester Asset Management and starts with how the firm puts money to work before getting into the stock. Chester has been around since 2017, and Kavanagh describes it as a GARP type fund built around growth at a reasonable price. Then the chat gets into the machinery of Light and Wonder. Kavanagh lays out the case that studio spending can turn into better gaming titles, higher outright sales, more revenue, and more R&D. He ties the 2020 and 2021 studio investment period to the company's later ability to make better machines and improve the economics of new titles. SciPlay is where the pitch gets sharper. Kavanagh explains it as a mobile gaming business where users download apps and can spend money inside games to enhance the experience, with Monopoly given as one example. Light and Wonder recently went from roughly 81% ownership to 100%, which gives it access to cash inside the segment and full control over decisions. That matters because failed games are expensive. Rather than design and manufacture a machine, launch it, and wear the loss if it misses, Light and Wonder can test concepts through a digital outlet first. Judd keeps pressing on the practical downside, and Kavanagh keeps coming back to the same point: SciPlay helps show what resonates before larger capital goes into machines. The close turns to valuation. Kavanagh references Light and Wonder at about eight and a half times EBITDA and compares the possible multiple to Aristocrat on a one year forward basis. If Light and Wonder got a similar multiple, he says more than 200 Australian dollars a share is easy to see against about 135. Judd keeps it dry, joking that a broking job may be waiting if funds management does not work out, but the case stays tied to cash flow, testing discipline, and multiple expansion.

As heard by us

A focused GARP and valuation chat with enough detail to reward patient stock listeners.

Chris Judd talks with Anthony Kavanagh of Chester Asset Management about the firm's GARP approach and its pyramid style allocation, with roughly two thirds of the book in predictables or industrial names.

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Why you'd press play

You want a grounded read on a gaming stock and the valuation gap behind it.

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