Crown Resorts forecasts hit by Macau casino earnings

Crown Resorts forecasts hit by Macau casino earnings - 24th November 2015


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James Packer speaks tio the media ahead of Studio City’s opening.


by Sarah-Jane Tasker

James Packer’s Crown Resorts has had its earnings forecasts trimmed on the back of a slower-than-expected ramp up of its new Macau casino.

Goldman Sachs revised its earnings-per-share estimates for Crown (CWN) after its Hong Kong gaming team reduced the earnings outlook for Melco Crown Entertainment, in which Crown Resorts has a 34 per cent stake.

Mr Packer and Melco Crown’s Lawrence Ho opened the $US3.2bn Studio City casino resort in Macau last month amid a slump in the Asian gaming region.

Goldman Sachs’ gaming team had lowered their earnings forecasts for Melco Crown on the back of a slower-than-expected ramp up of Studio City and have warned that if the current run rate persists, it could present downside risks to consensus earnings forecasts.

The bank’s gaming analysts, who recently hosted a gaming panel at Goldman Sachs’ China conference, also noted that recent comments from Li Gang, director of Chinese liaison office in Macau, signalled that the government appreciated the importance of the gaming industry and was more open to issuing new or relaxing existing policy measures to support the market.

“This is consistent with other recent commentary, and suggests we may be nearing the end of what has been a protracted downgrade cycle,” Goldman Sachs’ analyst Adam Alexander said in a note on Crown Resorts.

Mr Alexander added that despite the downgrades, the bank retained its “buy” rating on Crown Resorts as it believed that the risk/reward remained favourable.

“Crown has a strong domestic franchise, and although uncertainty in Macau continues, we believe it is more than reflected in the share price,” he said.

(The Australian)