Stocks’ Details

Crown Resorts Limited (ASX:CWN)

Crown Sydney could be a major attraction - Crown Resorts Limited, formerly Crown Limited, is engaged in gaming and entertainment business. Lately, the Group announced the cancellation of the buy-back of the outstanding Subordinated Notes those were listed on ASX under the code "CWNHA" and announced that in the week ending 29 June 2018, no Notes were bought back, at 29 June 2018. A cumulative total of 1,342,270 Notes have been bought back and still there were 3,977,430 outstanding Notes on issue which were still not bought back by Crown as on 29 June 2018.The board of director declared an interim dividend of 30 cents per share (franked at 60 per cent) which was paid on April 04, 2018. Recently, the Victorian Commission for Gambling and Liquor Regulation (Commission) issued a letter of censure to Crown Melbourne and imposed a fine of $300,000 on Crown Melbourne in relation to the Gaming Machine Trial and further the Commission accepted that the contravention was not deliberate and that the Gaming Machine Trial did not impact the return to player ratio.


Net Debt Comparison (Source: Company Reports)

The Group entered into various agreements in 2017 like it entered into an agreement with a subsidiary of Wynn Resorts Limited to sell its interest in a 34.6 -acre vacant site on Las Vegas Boulevard (the “Alon Land”) for US$300 million. It also entered into an agreement for the sale of its 62 per cent interest in CrownBet, together with loans advanced by it to CrownBet, for $150 million. Moreover, NPAT was up by 0.6 per cent in 1HFY18 with an increase of 4.8 per cent in revenue as compared to 1HFY17. Group’s Net Debt decreased from $308.5 million from June 2017 to $249.9 million in December 2017. Moreover, the Group is planning to build a brand new hotel at the Melbourne complex. The stock has been rising up since 10 years on ASX and was up by 5.95 per cent in last three months but slipped by 2.41 per cent in last five days as on 2 July 2018. We give a “Hold” recommendation at the current market price of $13.41 as it is expected that the Group will grow in future once it finishes building Crown Sydney, which could be a major attraction in Australia’s richest city. Further, the tourism boost can help gain better momentum in the coming period.

Village Roadshow Limited (ASX:VRL)

Benefits of New Ticketing Plan expected - Village Roadshow is an international entertainment company whose core businesses include theme parks, cinema exhibition, film distribution and film production. Recently,the Company signed an agreement to sell its wholly owned Wet‘n’Wild Water Park located in Western Sydney to Parques Reunidos, for a consideration of $40 million plus a variable compensation that will depend on the Park’s revenue performance up to 30 June 2020. Parques Reunidos is one of the world’s leading leisure park operators based in Spain having a portfolio of over 60 entertainment assets around the world. It is expected that the transaction will be completed in the first quarter of FY2019, subject to customary conditions precedent. With this Parques Reunidos will get an entry into the Australian market and its extensive experience of operating 20 water parks around the world will help in adding the value and will enhance Wet‘n’Wild Sydney’s performance over the coming years. The net proceeds from this transaction will be used to lower down the Company’s debts and will lead to a pre-tax loss of approximately $25 million which will be disclosed as a material item in the FY2018 results.


Company’s tentative schedule of opening new sites (Source: Company Reports)

In the meanwhile, VRL issued 30,208 ordinary shares for a consideration of $2.40 for each share. VRL’s two main divisions, Theme Parks and Cinema Exhibitions, have continued to experience challenging trading conditions and overall VRL results for the year ending on 30 June 2018 are now expected to be below those set out in previous VRL announcements which were made in January and February 2018. Nonetheless, its new pricing/ticketing and marketing strategy for the Theme Park division has been flagged to be profit accretive and VRL currently expects FY18 attributable NPAT before material items and discounted operations to be within the range of a loss of $10 million to break even. The Group successfully reduced its leverage ratio to be below 3.0X at 31 December 2017. The Group’s powerful creative marketing campaigns will make sure that VRTP’s offerings are “Irresistible and must see”. The stock price has been declining since long (down by 56.98 per cent in last five years) but recovered in the last five days that is by 2.25 per cent as on 2 July 2018. The stock was up by 1.32 per cent as on 3 July 2018. We give a “Hold” recommendation at the current market price of $2.30 as one should wait and watch the impact of the new strategies that Group is undertaking to revive its growth momentum.

 
 
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