Star Entertainment Group said its domestic gaming revenue in July reached 80 percent of the prior calendar year and that investment in its properties will enhance long-term growth potential.
Reporting its annual results, the group said total revenue in July was at 75 percent of the same month last year, while its VIP turnover volumes were just 5 percent of the total.
In the first 17 days in August, those trends continued in Queensland, but its property in Sydney was hit by additional social distancing requirements due to an uptick in Covid-19 cases.
For the fiscal year ending June 30, the company reported a 31 percent drop in statutory revenue to $1.48 billion, while it swung to a loss of $95 million.
Prior to the crisis, however, the group reported strong results. Normalised profit after tax gained 15.6 percent to $67 million, while on the same basis for the full year, profit was down 46 percent.
“SGR has seen defensive, stable and transparent domestic earnings growth and has invested strategically in expansion and refurbishment in the domestic market,” J.P. Morgan analyst Don Carducci wrote in a note. “SGR’s domestic gaming offers a high-margin, predictable and recurring portion of earnings, and the company is delivering on initiatives to improve the domestic offering by reinvesting in the customer and driving tourism through product and loyalty.”
With borders closed to international travel for the foreseeable future, Australia’s casinos will be relying on their domestic base. J.P. Morgan points out that there is further downside risk from low consumer confidence levels and heavily indebted consumers.
This “creates concerns around discretionary spending levels as there are rising cost of living pressures.”
Star welcomed the Queensland government’s decision to drop its plans to issue a second license on the Gold Coast, which would have competed with its existing IR in that location. It also welcomed an extension of its exclusivity on electronic gaming machines in Sydney until 2041.
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