What: Ainsworth Game Technology Limited (ASX: AGI) and Seven Group Holdings Ltd (ASX: SVW) held their annual general meetings (AGM) on Wednesday and by the end of the day these two stocks had fallen by 8.5% and 9.2% respectively.
Meanwhile on Thursday Sonic Healthcare Limited (ASX: SHL) sunk 5.5% after providing a revised profit update at its AGM.
So what: Gaming developer Ainsworth enjoyed a stellar year in FY 2014 with revenue growing 23% to $244 million and profits increasing by 18% to $62 million. At the company's AGM, management stated that they still expect to achieve overall revenue growth in FY 2015, however, they guided towards a very weak first half with domestic revenue down around 30% but expectations for a very strong second half.
There was a lack of guidance for profit expectations, however, investors would appear to have not been enthused by the all-to common theme spreading across the market whereby companies are relying heavily on strong second halves to meet full year guidance and duly knocked the price down on Ainsworth's shares.
Over at Kerry Stokes' investment vehicle Seven Group, the firm has been battling the headwind of a slowing resources sector and this has impacted demand for heavy earth moving equipment at Seven's WesTrac division.
This led Seven's management to note that they continue to see tough trading conditions in the industrial services and mining sectors, particularly related to new equipment sales. All told, rather than a flat year-on-year earnings forecast, Seven now expects earnings before interest and tax to be down 10% to 15% in FY 2015.
While the numbers in FY 2014 were pleasing with Sonic posting revenue, profit and dividend growth of 5%, 6.5%, and 8% respectively on a constant currency basis, the outlook for FY 2015 is more muted.
It doesn't look like Sonic will be able to maintain those growth rates in FY 2015 with the CEO revising EBITDA growth down from 5% to between 2% and 4%. Once again expectations were weighted towards a strong second half earnings result.
Now what: All three companies appear to be taking the necessary steps to create future shareholder value. Ainsworth is expanding into online gaming and more US territories, Seven has stripped $84 million per annum in labour costs from its WesTrac business, and Sonic has made further acquisitions.
As market leading businesses with global operations, these are exactly the types of businesses investors may look to purchase when they are out-of-favour and their share prices marked down.
