Gaming | Fitch expects Crown Resorts revenue decline to continue

James Packer

Australian-listed casino empire Crown Resorts can expect “a few more years of declining earnings,” according to Fitch Ratings.
The international ratings agency said that James Packer’s company will continue to suffer from dwindling dividends from its Macau-based Melco Crown Entertainment.
Fitch added that the Chinese government’s anti-corruption campaign, together with global macroeconomic uncertainty, had resulted in Macau’s gross gaming revenues declining by 39 percent year-on-year to USD22.64 billion in 2015. Fitch analyst Nandini Vijayaraghavan expects Melco Crown’s dividends to continually decline in 2016 and 2017, and offered ambiguous views on the Macau gaming industry’s chances of a quick recovery.
Crown Resorts owner James Packer announced last week that he would step down from the board of Crown Resorts, but will remain the co-chairman of Melco. His private investments firm, Consolidated Press Holdings, will also remain the majority shareholder with a 53 percent stake. Crown Resorts will reportedly proceed with the expansion plans and new projects despite the crisis, as they have a significant funding pipeline for the next four years.
“Crown’s pipeline of development projects, when complete, will diversify earnings and its portfolio of assets, and position Crown as a global gaming company with significant scale and diversity,” Mr Vijayaraghavan said.
Although studies show that the expansion is likely to result in increased financial leverage, it is still expected to comply with Fitch’s guidelines in the lead-up to project completion. The new projects include Crown Towers Perth, Alon Las Vegas, Crown Sydney and Queensbridge Melbourne.