Crown Resorts Limited

Crown Resorts Ltd (ASX: CWN) presented the FY 18 metrics in its annual general meeting held on November 1, 2018. CWN remained focused towards the improvement of underlying performance of Crown Melbourne and Crown Perth. It has successfully delivered the Crown Sydney project on time and on budget. Company has developed a financing solution for the proposed One Queensbridge project.
 
Moderate Financials with focus on building strong portfolio base:CWN Group posted 0.3% rise in the EBITDA from $790.3 million in FY17 to $792.4 million in FY18. Australian Resorts EBITDA noticed a drop of 2.5% from $828 million in FY17 to $807.5 million in FY18. 0.6% drop in the Australian resorts main floor gaming revenue (excluding VIP program play revenue) was recorded during FY18 as compared to the FY17. Wagering and Online Social Gaming Operations EBITDA recorded 81.8% growth up to $26.9 million in FY18 to $14.8 million in FY17. Group’s reported Net profit after tax before significant items posted 5.8% rise to $326.7 million in FY18.
 

Investments in Australian Resorts (Source: Company Reports)

CWN under its long term strategy has made rigorous investment in Australian resorts building a strong portfolio base. The company’s core portfolio includes some of the most valuable current and future tourism asset in Australia across Melbourne, Perth and Sydney. Projected capital expenditure of approximately $1.8 billion is expected to be spent between FY19-FY21, out of which $1.5 billion will be used for the construction of the Crown Sydney hotel resort. Total investment amount made by the group between FY14-FY21 is estimated to come around $3.8 billion.
 
Technically, the scrip is in downtrend mode from the month of August and has continued the trend till date, November 9, 2018. The scrip is trading at the lower Bollinger band with small wicks on downside indicating rejections to further downside for now. Relative Strength Index and other indicators reflect the stock to be in an oversold territory and the stock might see some support levels.
Fundamentally, the market cap of CWN was recorded at $8.07bn with P/E of 14.5x and beta over 1x as on November 9. At current juncture, the scrip is trading at the price levels of $11.77. The group’s financials may witness an impact from VIP and main floor and top line may not be significantly high in terms of growth. Moderate financials with focus on new investments to enhance the portfolio base, along with stock level at lower Bollinger band as per technical charts, exhibit a “Hold” position at the current price levels of $11.77 while the group may witness a low single digit stock upside (%) in medium term in view of developments.
 

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