Packer keeps the faith with gamble on Asia
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 continued to suffer from poor consumer sentiment.
The company has been associated with developments across the region, from Sri Lanka to the Philippines, plus 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 gave 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 capitalisation.
Recognition of Macau's performance over the past 12 months sent Crown's stock rocketing, despite subdued trading from its Australian operations.
Mr Packer assured investors planned projects - including a $US400 million casino resort in Sri Lanka and Sydney's $1 billion hotel-casino - were affordable.
Developments initiated by Melco Crown were self-funding, Mr Packer said. These included the Studio City development in Macau and a casino resort in the Philippines.
Melco Crown was also planning to pay a dividend next year to 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 [capital expenditure], our net debt will rise from here and that is the reason [why] we haven't increased dividends ... because we are looking to grow."
Sri Lanka would not require an "earth-moving cheque", he said. Crown was negotiating with the Sri Lankan government, which was reworking the regulatory and tax framework after criticism from the opposition. It was 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 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 prospects of Melco Crown. Crown shares closed 2 per cent higher at $16.65.