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The Star Entertainment Group Ltd SGR

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Stock XASX Rating as of
A$0.43 +0.02 (4.88%)
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As of Delayed Price Open
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Company Report

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Star Entertainment: Weak Trading and Elevated Compliance Spending Is Weighing on Profitability

Angus Hewitt

Weakness in premium gaming rooms continues to weigh on Star Entertainment’s earnings. Underlying EBITDA for the third quarter was AUD 38 million, down 12% on the previous corresponding period. While main floor gaming is up about 5% in aggregate, double-digit revenue declines in premium gaming rooms across all properties dragged revenue 5% below the PCP. Compliance costs have also risen as the firm focuses on regaining suitability to operate The Star Sydney in light of the second Bell inquiry, with monthly operating expenses about AUD 2 million higher than in the first half.

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Price vs Fair Value

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SGR is trading at a 54% discount.
Price
A$0.41
Fair Value
A$5.70
Uncertainty
Extreme
1-Star Price
A$5.90
5-Star Price
A$7.32
Economic Moat
Lbwg
Capital Allocation
Rdfnmhl

Bulls Say, Bears Say

Bulls

Despite competition, The Star's core Sydney casino provides an opportunity to turn around operations and grow in Australia's most populous market.

Bears

Following inquiries a more restrictive regulatory regime in Australia appears likely, weakening Star's ability to attract high rollers.

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Trading Information

Previous Close Price
A$0.41
Day Range
A$0.42–0.44
52-Week Range
A$0.39–1.19
Bid/Ask
A$0.43 / A$0.44
Market Cap
A$1.23 Bil
Volume/Avg
14.2 Mil / 18.1 Mil

Key Statistics

Price/Earnings (Normalized)
3.03
Price/Sales
0.44
Dividend Yield (Trailing)
—
Dividend Yield (Forward)
—
Total Yield
—

Company Profile

The Star Entertainment Group operates three hotel and casino complexes in Australia: The Star in Sydney (licence expiring in 2093, with electronic gaming machine exclusivity expiring in 2041), The Star Gold Coast (a perpetual licence), and Treasury Casino and Hotel in Brisbane (licence expiring in 2070). The Queen's Wharf development in Brisbane will have a 99-year licence on completion in 2024 (with a 25-year exclusivity period), replacing the Treasury Casino and Hotel, which will be repurposed into a hotel and retail site.
Sector
Consumer Cyclical
Industry
Resorts & Casinos
Stock Style Box
Small Value
Total Number of Employees
7,809
Website
https://www.starentertainmentgroup.com.au

Competitors

Valuation

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Metric
SGR
WYNN
SKC
Price/Earnings (Normalized)
 3.0323.3614.70
Price/Book Value
 0.46—0.85
Price/Sales
 0.441.601.48
Price/Cash Flow
 —8.407.01
Price/Earnings
SGR
WYNN
SKC

Financial Strength

Metric
SGR
WYNN
SKC
Quick Ratio
 0.661.850.64
Current Ratio
 0.851.930.73
Interest Coverage
 −11.361.152.10
Quick Ratio
SGR
WYNN
SKC

Profitability

Metric
SGR
WYNN
SKC
Return on Assets (Normalized)
 −5.90%7.42%1.58%
Return on Equity (Normalized)
 −10.16%—2.88%
Return on Invested Capital (Normalized)
 −4.53%12.12%1.80%
Return on Assets
SGR
WYNN
SKC
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Resorts & Casinos Industry Comparables

Screen in Investor
Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
LVS
Las Vegas Sands CorpTzrntyrtvXxvdzc$33.2 Bil
GXYYY
Galaxy Entertainment Group Ltd ADR—Pbbsfy$19.8 Bil
GXYEF
Galaxy Entertainment Group Ltd—Gssyp$19.8 Bil
SCHYF
Sands China Ltd Shs Unitary 144A/Reg S—Csfbccd$19.3 Bil
SCHYY
Sands China Ltd ADR—Swmpc$19.3 Bil
MGM
MGM Resorts InternationalPwvpqwlnJtp$12.5 Bil
WYNN
Wynn Resorts LtdYphtgjxvVqftbvg$10.4 Bil
CZR
Caesars Entertainment IncYlqftjdjjMkkl$7.9 Bil
MLCO
Melco Resorts and Entertainment Ltd ADRXdkzlpsmFndskh$2.9 Bil
PENN
PENN Entertainment IncNtnhzylXzh$2.5 Bil

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