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Crown Resorts and iShares S&P/ASX Dividend Opportunities ETF - Do these suit your appetite?

October 15, 2015 | Team Kalkine
Crown Resorts and iShares S&P/ASX Dividend Opportunities ETF - Do these suit your appetite?

Crown resorts



Melco Crown hits FY15 overall performance: Crown Resorts Ltd.’s (ASX: CWN) fiscal year of 2015 normalised NPAT fell over 17.9% year on year (yoy) to $525.5 million. Although gaming revenues from Melbourne and Perth delivered better results, Melco Crown’s gaming revenue pressure and asset impairments contributed to a poor performance. Accordingly, the group incurred asset impairments of $61.3 million during FY15 while reported EBITDA declined over 11.4% yoy to $778.1 million in FY15. Crown’s share of Melco crown’s normalized NPAT reached $161.3 million in FY15, which is down by $129.9 million or 44.6% yoy, impacted by the weak gaming revenue across the Macau market given the tough market conditions. Moreover, Macau’s gross gaming revenues also fell 26.8% yoy during the fiscal year of 2015, which witnessed more pressure during second half of 2015 declining by 37.0% yoy. On the other hand, cost efficiency measures drove Crown Melbourne’s normalized EBITDA by 17.8% yoy while the group’s Perth normalized EBITDA rose 5.3% yoy. Crown Melbourne’s main floor gaming revenue surged 6.9% yoy while Crown Perth’s gaming revenue delivered only 2.6% yoy increase. Australian resorts’ revenue rose by 14.0% yoy to $3,209.2 million in FY15, driven by Main floor gaming revenue increase of 5.5% yoy to $1,588.6 million. Non-gaming revenue improved by 4.7% yoy to $664.7 million, while the VIP program play turnover delivered 41.8% yoy improvement to $70.8 billion. Australian resorts’ normalized EBITDA surged 14.1% to $916.5 million.
 
Growing tourism prospects to drive growth: Crown Resorts stock plunged over 13.29% (as of Oct 15, 2015) in the last six months owing to the poor fiscal year of 2015 performance. On the other hand, Crown is pursuing all options to revamp growth and its VIP international marketing efforts would further drive VIP play turnover. The group’s Australian resorts business would benefit from the exclusion of Super Tax on VIP program play at Crown Melbourne. Additionally, tax rate cut of VIP program play from 12% to 9% at Crown Perth would further boost the group’s Australia’s business. Melco Crown is opening an entertainment-focused Studio City project, and management believes that the victory of this project could also act as a major growth booster in the coming periods.

 
Investments in Large Scale Tourism Attractions (Source: Company Reports)

Moreover, the group’s earnings would also boost in the long term with the improvement of Australian tourism. Crown resorts has a decent dividend yield of 3.22%. We remain bullish on the stock and reiterate our “BUY” recommendation at the current price of $11.71.


CWN Daily Chart (Source: Thomson Reuters)
 

iShares S&P/ASX High Dividend Index Fund

Fiscal year 2015 performance highlights: iShares S&P/ASX High Dividend Index Fund (ASX: IHD) delivered one year returns of 1.43% p.a and three year returns of 11% p.a. The index fund’s net assets attributable to unit-holders as at June 30, 2015 improved to $234.68 million, as compared to $219.53 million in the prior corresponding period (pcp). On the other hand, total net investment income fell to $3.48 million in fiscal year of 2015, against the $19.2 million in fiscal year of 2014 due to net losses of financial instruments of $7.5 million during the period from $9.9 million in pcp. Meanwhile, total assets slightly increased to $239.49 million as at June 30, 2015 as compared to $237.38 million in year ending on June 30, 2014. But, the cash decreased to $1.1 million in FY15 from $4.1 million in FY14. Blackrock investment management announced a cash distribution of 28.85 cents per unit for iShares S&P/ASX High Dividend Index Fund. Blackrock investment management also reported the dividend reinvestment price of $13.59 for iShares S&P/ASX High Dividend Index.

Outlook: iShares S&P/ASX High Dividend opportunities ETF have been under pressure from quite a while now, falling over 5.6% (as of Oct 15, 2015) in the last one year. iShares S&P/ASX High Dividend Index ETF delivered a negative year to date returns of over 5.54% and declined by 7.87% in the last three months. On the other hand, the iShares S&P/ASX High Dividend Index ETF has been recovering from last few days. Investors are looking for high dividend stocks given the current volatile market conditions, and consequently we believe that iShares S&P/ASX High Dividend Index is well positioned to provide an opportunity to be leveraged by the investors. IHD also has an annual dividend yield of 6.79%. Based on the foregoing, we give a “BUY” recommendation to the fund at the current price of $13.93.


IHD Daily Chart (Source: Thomson Reuters)

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