Chinese crackdown hasn’t hurt us yet, says Craigie

CROWN Resorts CEO says the company’s Australian operations have not been affected by a Chinese crackdown.

CROWN Resorts chief executive Rowen Craigie says the company’s Australian operations have not been affected by the Chinese government’s crackdown on corruption and lavish spending.

Speaking at The Australian’s Australia in the China’s Century conference on Friday, Mr Craigie said while Australia received only a small proportion of the Chinese high-roller market, Crown had not seen any effect of the government reforms.

“We haven’t seen any impact on the business here in Australia of ... visa restrictions, which seem to come and go in China, and the crackdowns,’’ Mr Craigie said.

In February, Crown said its first-half underlying net profit rose 29.4 per cent to $315 million, but the profit increase was solely attributable to the rapid growth of its Macau joint venture, Melco Crown Entertainment.

Crown Melbourne’s revenue was down 9.4 per cent in the half to $950.2m, while the group’s smaller Perth casino reported a 1.7 per cent rise in revenue to $451.5m in the period.

While the Chinese New Year period saw a significant pick-up in trading, especially in the VIP operation, Crown’s Australian business continues to be affected by weak consumer sentiment.

Meanwhile, the Macau government is preparing to implement a “full smoking ban” at its casinos from the start of October. Specific rooms for smokers will be created on casino premises, but they will not have any gambling tables.

The ban will affect only traditional Macau gaming floors and exempts the high-end private VIP gaming rooms, but it is the premium mass market that is driving the booming gaming revenues in Macau.

Macau’s six casino operators independently petitioned the government last December, asking that mass-market gaming floors go smoke-free in exchange for allowing smoking rooms.

In Macau the authorities are also cracking down on illegal money transfers and are considering tighter visa rules for mainland tourists. For the year so far, Macau’s gaming revenue is up 17.5 per cent.

Crown’s executive vice-president, strategy and development, Todd Nisbet told the China conference that the government reforms and the broader slowdown in the Chinese economy would not affect Macau’s ongoing outperformance.

“People talk about a slowdown, but, I mean, we’ve been looking at 15 per cent growth. So when you talk about that kind of compounded growth, the base of it is so large that you just can’t sustain that. So all of a sudden 15 goes to 12, 12 goes to 10, and there seems to be a general panic. But the reality is that’s still one of the highest-growth markets in the world in terms of what has been done on a GDP basis, investment per capita, earnings per capita. So anything you look at, by any metric, it’s still an outperformer,’’ he said.

“There’s like 88 cranes running in Macau right now and about $10 billion worth of investment. So, you know, for whatever the noise there is, the reality is capital is being deployed.”