In today’s daily we have covered stock research on CROWN (BUY).









 
The S&P 500 was up by 0.80points or 0.04%on Tuesday to 1990.43 points. The S&P 500 moved more than 40 points from its high of the day to its low. Chevron up 2.6 percent, was leading the points advance in the sector. Chevron's forward price-to-earnings ratio was at 13.6 at the close on Monday, compared to the S&P 500's 16.1, meaning investors pay less for every dollar of Chevron's earnings than they do for the S&P 500 overall.

Europe’s Stoxx 600 index snapped six days of losses as energy shares rebounded from a five-year low. Oil-and-gas producers rose for the first time in seven days, with Royal Dutch Shell Plc. and BG Group Plc. climbing more than 4 percent. Carmakers also gained. Crude oil has slumped about 45 percent this year as the Organization of Petroleum Exporting Countries sought to defend market share amid a U.S. shale boom that’s exacerbating a global gut.
 




Chevron Daily Chart (Source – Thomson Reuters)
S&P ASX 200was down by 33.8points or 0.65%on Tuesday and closed at 5152.3 points. Australia’s biggest oil ­producer Woodside Petroleum fell 2.6 per cent to $34.46 as the company agreed to pay Apache $US2.75 billion ($3.34 billion) for a stake in two LNG projects. BHP dropped 3.2 per cent to $27.42, while main rival Rio Tinto lost 1.6 per cent to $52.65. Junior iron ore producer Atlas Iron was the best-performing stock in the ASX 200, rebounding 7.4 per cent to 14.5¢. Atlas has lost 79 per cent since June amid a slump in iron ore prices.
Telstra was down 0.4 per cent at $5.72 despite positive sentiment from a deal inked with NBN Co over the weekend.National Australia Bank edged up 0.1 per cent to $31.50 as its sale of a £1.2 billion ($2.28 billion) parcel of risky property loans was seen as another step towards exiting its ­challenged UK business. Commonwealth Bank fell 0.4 per cent to $80.95, Westpac lost 0.8 per cent to $31.57, and ANZ shed 0.1 per cent to $30.74.

Atlas Iron Daily Chart (Source – Thomson Reuters)
 
Top Performers on the ASX 200 were :-


 
Stock of the Day - Crown Resorts (BUY)

One of the Australia’s largest entertainment groups with businesses and investments in the integrated resort and entertainment sectors, the Crown Resorts (CWN), appears to be a striking target of interest. CWN with the Australian corporate bookmaker, BetEasy Pty Ltd very recently announced a transaction that will result in a JV between said Companies with 67% ownership held with CWN. This transaction involves the combination of BetEasy’s sports book business with the sports book business of CWN’s 100% owned subsidiary, Betfair Pty Ltd. This will provide a platform that will allow leveraging the combined assets of said Companies to provide significant benefits and opportunities for CWN’s existing and future customers. 


The other latest highlight is the Company’s plan for a new five-star hotel in Melbourne with Schiavello Group to meet tourism demand. CWN announced for acquiring an interest in four adjoining parcels of land in Queensbridge Street, Southbank, Victoria, which are opposite the Crown Melbourne Integrated Resort. The Company has agreed to an initial investment of $50 million to participate in the joint development of the project with Schiavello. Negotiation of JV arrangements are underway. Most likely, CWN would have the right to acquire and manage the hotel on completion and Schiavello Group would have the right to acquire an office and showroom area within the complex. There is also a proposal to connect the new hotel to the casino. Further, it has been reported that no gaming operation will be conducted in the new building. The development is nonetheless subject to negotiation of a final joint venture agreement, financing arrangements and a construction contract with a builder along with planning and other government approvals. This project is expected to deliver jobs, taxes and economic activity for the City of Melbourne. The new hotel will provide additional capacity to CWN’s tourism segment.


Crown Melbourne Normalised Revenue and EBITDA Performance (Source – Company Reports)

The Company together with its consortium partner, Greenland Group, has also lodged a bid in response to the Queensland Government’s Request for Detailed Proposals for the Queen’s Wharf Brisbane site. 

In November 2014, the Company announced that the Victorian Commission for Gambling and Liquor Regulation has determined to amend the Melbourne Casino License to give effect to the Agreement between the Victorian Government and CWN announced on 22 August 2014. The amendments will help enhance Victorian tourism and create new jobs while enabling CWN lead in a highly competitive environment.

Along with developments including the above, CWN also brought changes at the Management with its latest announcement that Mr. Robert Rankin has been appointed as the Company’s Chief Executive. This may boost CWN’s strategy to some degree.


Crown Towers Perth - Expected to Open Late 2016 (Source – Company Reports)

Additionally, the recently illustrated financial results for 2014 (normalised NPAT of $640.0 million, which was up 35.2% on the previous year, and normalised EBITDA of $782.7 million, which was up 3.2% on the previous year), satisfactory performance by Crown Melbourne and Crown Perth in second half of the year, improved trading, solid results from Macau joint venture (Melco Crown Entertainment), iconic projects on hotel resorts such as Crown Sydney Project and Crown Towers Perth, commitment to communities through platforms such as National Philanthropic Fund etc., all speak leaps and bounds for CWN efforts towards sustaining a strong position in the market.


CWN Daily Chart (Source - Thomson Reuters)

Certain factors such as decline in Macau gross gaming revenue in November 2014 by 19.6% to MOP24.3bn has been in consensus with market estimate of a decline of 20%. Nonetheless, YTD gross gaming revenue rose by 0.3%. On the other hand, Melco’s balance sheet’s strength looks good in view of the expectation of Melco maintaining a positive net cash position through FY17. The cash flow footing may further build-up in view of the pending opening of City of Dreams Manila. This may help counterbalance any further slippage in Macau.


MCE - Studio City – Expected to Open Mid 2015 (Source – Company Reports)

The soft consumer sentiment, weak growth in VIP turnover and other headwinds may not stand high against CWN’s long-term appeal given its efforts in exploring various opportunities with regards to new growth projects, long-dated licenses, JVs etc.

Accordingly, we reinstate a BUY recommendation for this stock at the current price of $12.63.
  
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