NewsBite

The Star distances itself from Crown Resort’s Chinese drama

The Star is examining any scope to reduce its risk further, with $700m wiped from its value since the Crown arrests.

The Star Entertainment Group chairman John O’Neill. (Pic Annette Dew)
The Star Entertainment Group chairman John O’Neill. (Pic Annette Dew)

The Star Entertainment Group’s chief executive Matt Bekier says the casino company and its Chinese customers were being “cautious”, since the arrest of rival Crown Resort’s staff in the economic powerhouse.

Mr Bekier, in his first comments on his rival’s China drama -- which has wiped around $700 million from The Star’s market value since the arrests were made two weeks ago -- added that The Star (SGR) was also examining if there was more it could do to reduce its risk in China.

“Because there is a lot of misinformation and very little reliable information, everybody is extremely cautious and that goes for us and some of our customers,” he told The Australian after the company’s annual general meeting today.

“Because this is a reasonably quiet period of time, it’s almost impossible to read out the trend because you are only looking at a small number of players. We haven’t seen any changes in behaviour.”

Mr Bekier said that everything the company did was to strive to be compliant with local regulations. He said when an incident such as the Crown arrests occurred, it would be unwise not to ask the question whether there was more that could be done to reduce the company’s risk.

“We are certainly thinking very hard about that right now,” he said.

Shares in The Star have slumped around 13.5 per cent over the past two weeks since the Crown arrests were revealed.

Mr Bekier said he had been surprised by the market reaction.

“There is a lot of misinformation and misrepresentation around, so everybody is jumping at shadows, including the market,” he said.

The casino boss added the The Star had for sometime been pushing its South East Asia business, minus China, to target mass market customers.

“So there is a greater diversity of players and sources of players that we can market to,” he said.

The Star told its shareholders at the annual meeting today that its VIP business delivered less than 30 per cent of the group’s gross revenue and 16 per cent of EBITDA. Chairman John O’Neill said around 80 per cent of that revenue was derived from junkets out of Asia. The Crown issue is said to be related to the direct marketing of its resorts to VIP clients.

“These are early days in terms of the situation in China,” Mr O’Neill said.

“We will continue to monitor developments closely, while working with staff and Asian-based external agents to understand the situation more fully as it unfolds.”

The trading update also shows that actual group revenues were up 12.8 per cent on the same period last year, while normalised total group revenue was down 2 per cent. Domestic revenue, excluding international VIP play, was flat to last year.

Mr Bekier said the domestic business was impacted by an unusually low win rate in private gaming room table games of 15.9 per cent versus 17.2 per cent on the prior corresponding period, which he said could occur over shorter periods of time.

Add your comment to this story

To join the conversation, please Don't have an account? Register

Join the conversation, you are commenting as Logout

Original URL: https://www.theaustralian.com.au/business/companies/the-star-distances-itself-from-crown-resorts-chinese-drama/news-story/9ede646fc39d1372a6f470fd603b5d34