The Star hits record share price

Investors have extended the casino group’s near 20pc rise this year, ahead of its annual results.

GCB artists impression The new Star casino logos

The Star Entertainment Group has hit a share price record on the Australian market today, ahead of its annual results tomorrow.

Shares in the company are up slightly on Thursday afternoon to $6.09, which is a record high for the casino operator. Its shares are also tracking well ahead of the Australian market, with The Star’s share price rising almost 20 per cent so far this year, compared to the local bourse, which is up around 5 per cent.

The share price rise today comes as Morgans initiated coverage of the company with a $6.90 price target.

In a client note titled, “Star shining bright”, Morgans’ analyst James Lawrence said he viewed the company as “attractive” compared to its rival, the James Packer owned Crown Resorts.

“Strong inbound tourism will continue to help drive revenues with The Star now taking a more active role in seeking to capture tourist gambling spend at its casinos,” Mr Lawrence said.

“While over the past few years inbound tourism growth has exceeded 6.5 per cent per annum, it is expected to remain at a robust level of 5.6 per cent per annum through to 2025.

“Particular strength is being witnessed from Chinese tourists who have a higher propensity to spend on gambling, relative to other tourists, which bodes particularly well for The Star.”

The analyst highlighted that while average inbound tourist expenditure was growing, gambling spend as a percentage of total tourist spend was also increasing.

He also said that with interest rates forecast to stay at record low levels for an extended period, the investment bank expected domestic spend on gambling to remain robust.

Mr Lawrence added that while total gambling spend as a percentage of household disposable income had declined over the past 20 years, casino spend as a percentage of household disposable income had remained steady at approximately 0.5 per cent.

“Household disposable income is expected to remain high given low interest rates and we continue to expect casino spending to remain steady as a percentage of total gambling spend,” he said.

“We see potential upside to this number given the significant capital expenditure being undertaken on casino upgrades, which we anticipate will drive further customer interaction and ultimately customer spend.”