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    CWN   AU000000CWN6

CROWN RESORTS LIMITED

(CWN)
  Report
End-of-day quote. End-of-day quote Australian Stock Exchange - 11/29
11.1 AUD   -0.98%
11/21Ord Minnett rates CWN as Buy
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Crown Resorts : Australian casino operator Crown braces for adverse findings from misconduct inquiry

10/14/2021 | 01:09am EST

SYDNEY, Oct 14 (Reuters) - Australian casino company Crown Resorts Ltd may be declared unfit for its main gambling licence when an inquiry reports its findings on Friday, but is expected to be allowed to stay open with conditions because of its outsized economic role.

Investors have largely factored in wide-ranging adverse findings from an inquiry mandated by the state of Victoria, home to its Melbourne casino which accounts for three-quarters of its profits.

The inquiry, known as a Royal Commission, has heard detailed accounts of Crown enabling money laundering and failing to act on regulatory concerns and is the second such probe after one in neighbouring New South Wales state heard similar accounts.

That earlier inquiry led to a suspension of Crown's Sydney gambling licence before its A$2.1 billion skyscraper resort was opened in December 2020. It continues to operate with restaurants, bars and a hotel, but no gambling.

The Melbourne casino could, however, retain gambling in some way albeit with supervision, investors say.

They note it is one of the state's biggest employers with 11,500 staff and the government would be loathe to dent tourism further at a time when the country is preparing to reopen borders after two years of COVID-19 restrictions.

"The expectation is that they will be deemed unfit, that's what most of the market is telling you," said John Ayoub, a portfolio manager at Wilson Asset Management which has Crown shares. "The unknown is: what does that mean?"

"There is a balance between (addressing wrongdoing and) jobs and tax revenues that the casinos do generate. Tourism's going to be a big way we can get ourselves out of the state debt holes that they're in. It's critical infrastructure," he added.

Crown declined to comment.

Over both inquiries, which included billionaire James Packer - Crown's biggest shareholder with a 37% stake - livestreaming evidence from his yacht, executives acknowledged misleading the public by claiming in full-page newspaper ads that it had no association with tour operators with criminal ties.

They also said they were repairing regulator relationships and cutting ties with tour operators. After losing its CEO, chairman, most of its board and many senior staff over the inquiries, the company argues that it is under new management.

At the latest inquiry, Crown's lawyer accepted an "unsuitability" finding was possible, but urged against recommending a breakup or unconditional delicensing of the company.

Crown has had three M&A approaches since the Sydney inquiry. It rejected an offer from U.S. private equity firm Blackstone that valued the company at $6.2 billion and its favoured buyer, rival Star Entertainment Group Ltd, has since walked away. Talks for Oaktree Capital to fund a change of control have also collapsed.

This week media reports accused Star of failing to act on money laundering risks and that has reduced the chances of Crown being ordered shut, said Angus Gluskie, managing director of White Funds Management which has Crown shares.

Regulators will "need to make constructive recommendations. They can't suspend the whole industry," he said.

Crown's shares have tumbled 27% since media reports alleged wrongdoing in 2019, valuing the company at A$6.3 billion ($4.7 billion).

($1 = 1.3541 Australian dollars) (Reporting by Byron Kaye; Editing by Edwina Gibbs)


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
CROWN RESORTS LIMITED -0.98% 11.1 End-of-day quote.15.26%
THE STAR ENTERTAINMENT GROUP LIMITED -2.50% 3.51 End-of-day quote.-4.62%
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Analyst Recommendations on CROWN RESORTS LIMITED
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Financials
Sales 2022 2 066 M 1 473 M 1 473 M
Net income 2022 -40,5 M -28,9 M -28,9 M
Net Debt 2022 434 M 310 M 310 M
P/E ratio 2022 -357x
Yield 2022 1,35%
Capitalization 7 516 M 5 350 M 5 358 M
EV / Sales 2022 3,85x
EV / Sales 2023 2,44x
Nbr of Employees 12 489
Free-Float 53,2%
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Mean consensus HOLD
Number of Analysts 10
Last Close Price 11,10 AUD
Average target price 11,45 AUD
Spread / Average Target 3,16%
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Managers and Directors
Steven B. McCann Chief Executive Officer, Director & MD
Alan McGregor Chief Financial Officer & Secretary
Sarah Jane Halton Chairman
Steven J. Blackburn Chief Compliance & Financial Crimes Officer
Nigel Barclay Morrison Non-Executive Director
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