Star H1 revenue rises, but outlook cautious

Star Entertainment posted a 15.9 percent increase in H1 revenue as its international business rebounded, though statutory profit was hit by an abnormally low win rate.

The company posted normalized revenue of $1.36 billion ($1.07 billion), though actual revenue gained just 3.3 percent to $1.27 billion compared with the prior year. The win rate in the international VIP rebate business was a low 1.06 percent, compared with 1.62 percent the year before.

Normalized profit after tax was up 12.4 percent to $120 million, while statutory profit dropped almost 77 percent to $33 million. Statutory profit was also hit by $32 million in significant items, mainly related to debt restructuring.

The company said the international business had now returned to normal levels after dropping off sharply in the wake of the arrest of Crown Resorts employees in China on gambling charges in 2016. Star has also been pushing to diversify its international business and said those efforts are paying off.

“We continue to moderate the reliance on North Asian visitation, and our expansion into other international markets has been supported by the bolstering of sales teams to cover a larger and more balanced footprint,” CEO and Managing Director Matt Bekier said.

Star said work on its new IR at the Queen’s Wharf in Brisbane was progressing well and the group has received approval for a larger gross floor area to maximise returns.

Despite the improved results in H1, the group was cautious about the outlook for the second half of the year.

“The start to the second half of FY2018 has been mixed,” Bekier said. “Direct comparisons with the prior corresponding period are difficult given the different timings of Lunar New Year and the relatively short period of trading. We are seeing pleasing performances in the Queensland properties and continued strength in the international business. Trading in Sydney has been softer than expected in the early parts of this year.”

“The full year FY2018 result may be impacted by several factors (which may be material in nature) including general macro-economic conditions, potential hold and win rate volatility in the private gaming room and International VIP Rebate business, level of debt or provisions, success of the Group’s marketing programs and any uncertainty related to the regulatory environment.”