Star’s big burst falls short of market expectations
Star Entertainment Group Ltd announced on Friday that its full-year net profit rose 15 percent. The group which is the second-largest casino group in Australia, missed analysts’ expectations even though revenue from wealthy Asian visitors hit a record high.
Despite falling short of analysts’ expectations by $238 million, the company still posted a net profit of $194.4 million for the year to June 30. The company’s shares fell three percent in early trade, underperforming the broader market.
The company said in a statement that profit grew because of ‘a combination of improved marketing, loyalty programme, sales activity, product offering and stronger macro-economic conditions’.
Turnover from the International VIP unit, which involves selling tourist packages to high rollers in China and elsewhere in Asia, grew 7 percent to a record A$49.5 billion.
Due to the Chinese government crackdown that is ravaging the casino industry in Asian gaming hub Macau, Star and their main Australian rival Crown Resorts Ltd are refurbishing and building new casinos in Australia’s tourism hotspots to capitalise on the exodus of big-spending Chinese gamblers.
The number of Chinese visitors is up 22 percent on last year and now accounts for the second most foreign tourists to Australian shores besides neighbouring New Zealand.
With Crown planning to build a A$2 billion casino at Barangaroo near Star’s flagship complex on the Sydney waterfront, Star has turned its attention to a new development in the country’s No. 3 city Brisbane.
The group will spend $120 million on the Brisbane resort plus up to $425 million more in refurbishing existing casinos in Sydney and the Gold Coast.
Although Star missed the analysts’ profit expectations, the company said its normalised profit, jumped 23 percent to $241.3 million and declared a final dividend of 7.5 cents per share, up 25 percent on the previous year.