LOGIN
FREE REPORT
REQUEST WALKTHROUGH
search
times
New call-to-action

Tags

See all

Articles

CWN

Why Did Crown Resorts Price Fall?

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

As the ASX rallied to record highs, Crown Resorts Limited (ASX: CWN) share price tumbled in the aftermath of revelations Crown is enticing unfavourable VIP gamblers to Australian shores.

crown-resorts-stock-price

Crown, which operates major casinos in Melbourne and Perth with a third set to open in Sydney in 2021. Had been trading around the $12.70 mark prior to the release of controversial allegations regarding Crowns connections to individuals involved with organised crime and the Chinese Communist Party.

Crown is accused of working with Australian border officials to fast track visas for Chinese “Junkets” with criminal ties. State governments have also been accused of overlooking questionable gamblers in favour of collecting tax revenue these actors generate from Australian casinos.

This comes following the 2016 arrest of 19 Crown employees for breaking local Chinese law banning gambling and its promotion. Worsening Crowns reputation the Victorian Commission for Gambling and Liquor Regulation, claim twice since 2015 they have imposed $150,000 fines on Crown for failing to abide by internal reporting controls.

Responding to media reports, Crown released a statement detailing “Crown does not comment on its business operations with particular individuals or businesses”. Yet Crown retains that effective internal reviews occur, that is supervised by governing financial watchdog AUSTRAC.

James Packer, who retains a 26% holding in the company despite selling $1.76 billion worth of Crown shares (19.99%) in May 2019 to Lawrence Ho director of Melco, has remained silent on the topic saying “ he had no knowledge of involvement and despite being a major shareholder, he was not a Director of Crown at the time employees were imprisoned in China and hadn’t been for many months before that”.

Crown Resorts receives over 15% of revenue from VIP gamblers, they make up a substantial category that is used to help justify casino development to state governments. This is the case at Crowns Barangaroo site intended to attract VIP gamblers. These allegations could result in a review of Crown’s gaming licences and setback the Barangaroo opening in 2021 jeopardising Crown Resorts forecast revenue over the medium term.

 


 

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978) (“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

 

New call-to-action
New call-to-action

Company Articles

Looking for more Stock Recommendations?

Fill in your details to receive our special report: Top 3 Income Stock Recommendations for 2020.