Crown Resorts Limited

Mixed Outlook: Crown Resorts Limited’s (ASX: CWN) stock tumbled 1.345 per cent on August 06, 2018 following the negative market sentiments in relation to ongoing China Criminal conviction for violating anti-gambling laws. Besides this, the group has recently released the final report of the Victorian Commission for Gambling and Liquor Regulation (VCGLR) in relation to the sixth review of the Casino Operator and Licence held by Crown Melbourne (Crown Melbourne), a subsidiary of Crown group. As per the report, the concerned authority found that Crown Melbourne remains suitable to continue to hold its licence to operate the Melbourne Casino. In addition to this, the authority found that Crown Melbourne is following the relevant legislation and agreements thereby it is in the public interest that the licence should continue in force. The commission conclusion also reflects the group’s investment in the Melbourne Casino complex and its operations to be around $447 Mn for upgradation and expanding the complex over the five years of the period. Further, the group has workforce strength of over 13,000 employees in Melbourne Casino complex making the complex the largest single-site workplace in Victoria. However, the group has received many awards across all facets of its business verticals such as hotel operations, diversity, training, employment, indigenous training and employment, restaurants and luxury spas during the review period.


1HFY18 Financial Highlights (Source: Company Reports)

On the financial front, Net Normalised NPAT attributable to the parent grew 0.6 per cent to $192.4 million in 1HFY18 but Reported NPAT attributable to the parent was significantly down by 33.65% to $238.6 million after significant items during the same period against the prior corresponding period (pcp). As a result, ROE was also substantially down by 250 bps to 4.6% in 1HFY18 from 1HFY17 (7.1%). However, the current ratio and quick ratio stood at 2.36x and 2.34x, respectively in 1HFY18 which is above Industry median (1.13x and 1.16x). Meanwhile, CWN stock has edged 1.21% in the past three months as on August 03, 2018 and is trading towards a higher level ($13.880). Based on the decent fundamentals coupled with organic and inorganic growth along with positive tourism market, we maintain our “Hold” recommendation on the stock at the current price of $ 13.200.

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