Crown still on track for Asian growth: Packer
Crown's executive chairman James Packer was forced to assure investors on Wednesday that its aggressive expansion plans in Asia were affordable, at a time when its local operations continue to suffer from poor consumer sentiment.
The company has been associated with developments across the region, from Sri Lanka to the Philippines, as well as ongoing projects in Macau and Australia.
"Crown's large and ongoing investment in tourism assets is testament to the fact we have a strong belief in the incredible power of the rising Chinese and Asian middle class," Mr Packer told Wednesday's shareholders' meeting.
He emphasised the opportunity at hand with the example of Crown's investment in its Macau joint venture, Melco Crown, which cost $US600 million. He said the venture was now worth $US6.2 billion, about half of Crown's market cap.
Recognition of Macau's performance over the past 12 months has sent Crown's stock rocketing, despite subdued trading from its Australian operations.
Mr Packer also assured investors that the various projects Crown has planned - which include a proposed $US400 million casino resort in Sri Lanka and a $1 billion hotel-casino in Sydney - are affordable.
Developments initiated by Melco Crown are self-funding, according to Mr Packer. These include the Studio City development in Macau and a casino resort in the Philippines.
Melco Crown is also looking to pay a dividend next year that will help Crown - renamed Crown Resorts at the meeting - pay for its local projects from a mixture of debt and retained earnings.
"Asia is self-funding and we're going to build Sydney [the Barangaroo hotel and VIP casino] and Perth [a hotel] out of increasing our debt a little bit but retaining some earnings," Mr Packer said.
"If you think about our capex, our net debt will rise from here and that is the reason that we haven't increased our dividends ... because we are looking to grow."
As for Sri Lanka, another project being handled by Crown, Mr Packer said it would not require an "earth-moving cheque".
Crown remains in negotiations with the Sri Lankan government about the proposed development.
The government is reworking the regulatory and tax framework for the project after criticism from the opposition. It is expected to go before Parliament next month.
Reporting on its Australian operations for the financial year to date, Crown said gaming revenues - excluding VIP - for the first 17 weeks were in line with the prior corresponding period, while non-gaming revenues across its two Australian casino resorts were up 10 per cent.
The impact of refurbishments in Melbourne and Perth and a "general softness in consumer sentiment have all impacted trading", chief executive Rowen Craigie said. Crown said the level of VIP play improved from that reported in the six months ending June 30 this year.
The company's shares hit record highs earlier this month as analysts upgraded the prospects of its Macau joint venture, and got another boost on Wednesday, with UBS raising its valuation of the stock to $19.35 based on a revision of the earning prospects of Melco Crown.
Crown shares closed 2 per cent higher at $16.65.