Star Entertainment Expected to Outshine Crown
Competition between the major Australian casino groups is ripe with the Star Entertainment Group expected to outshine Crown Resorts in their upcoming financial results. According to Mark Wilson from Deutsche Bank, the Crown’s financial results will be mixed while the Star Entertainment Group’s results will be strong.
“Crown Melbourne is benefiting from the strength in domestic gambling expenditure and increased Chinese tourism while Crown Perth is performing relatively well in a challenging environment,” stated Wilson.
“We expect the outlook commentary to also be mixed with a positive outlook for the Australian casinos, albeit with Crown Perth lagging and a subdued outlook for Macau.”
The Gaming Inspection and Coordination Bureau for Asia reported a 21.4 percent drop to 18.7 billion patacas ($3.3 billion) in casino revenue last month compared to the same time last year. This was the 20th straight month that revenue has dropped in the Asian gambling market.
Melco Crown Entertainment, Crown’s Macau casino, opened in October in the hopes of capitalising on the booming Asian gaming market; however it has been hit with the continued revenue slump in the area. Mr Packer remains confident about the long-term outlook for the operation.
On the other hand, the Star Entertainment Group has been showing a positive upwards trend with strong local gambling expenditure, a surge in Chinese tourism and successful cost control all contributing to its results. While the Crown also benefits from these factors, their Melco business is negatively impacting their overall results.
“NSW gaming machine expenditure has been strong, while Queensland remains solid and we expect Star Entertainment has continued win share,” commented Wilson.
“We expect the outlook commentary to be positive with the positive top line trends continuing into the new calendar year.”
April 16, 2017