Two stocks that plummeted heavily – Crown Resorts Ltd and Star Entertainment Group Ltd

Crown Resorts Ltd

CWN Details
· Detention of employees (including Executive Vice President) by Chinese authorities: Crown Resorts Ltd (ASX: CWN) stock fell over 13.9% on October 17, 2016 as the group reported that their Executive Vice President VIP International, Jason O’Connor is also among the 18 Crown employees who were detained by Chinese authorities. China’s Foreign Ministry has been reported to state that the detention comes at the back of suspected gambling crimes. The group is yet to be provided with details. Crown has otherwise divested their struggling Melco crown business, and has been on track to focus on their core domestic business. CWN is trading at a cheap P/E and has a decent dividend yield.

· Recommendation: We give a “Hold” recommendation on the stock at the current price of $ 11.15

Star Entertainment Group Ltd

SGR Details
· Won new casino license: The shares of Star Entertainment Group Ltd (ASX: SGR) fell over 3.7% on October 17, 2016 following the pressure on the peer in the industry (Crown Resorts). Recently, SGR reported that the group got a new casino license, wherein casino operations would start after completion of the Integrated Resort at Queen’s Wharf Brisbane. The Star Entertainment Group has a 50% interest in the casino license and needs to make several payments to the Queensland Government. But, the Group needs to make a payment of $77 million by 27 October 2016, under the agreements entered into by Destination Brisbane Consortium with the State of Queensland, which could pose pressure on its balance sheet. Moreover, the group has been making several investments leading to a rise in expenses for the short term.

Recommendation: We give an “Expensive” recommendation on the stock at the current price of $ 5.52

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