The Star Entertainment Group Ltd (ASX: SGR) share price is up almost 8% after the casino business reported its FY19 result.
Star Entertainment is one of Australia’s largest gaming and entertainment groups, it owns and operates The Star casino in Sydney, The Star on the Gold Coast and Treasury in Brisbane. It also acquired the Sheraton Grand Mirage on the Gold Coast in a joint venture and they manage the Gold Coast Convention and Exhibition Centre on behalf of the Queensland Government.
Star’s Shining Result In FY19
The casino operator reported that its statutory net revenue increased by 3.6% to $2.16 billion.
Statutory EBITDA before significant items (click here to learn what EBITDA means) rose by 14.1% to $553 million. There was EBITDA margin expansion in both Sydney and Queensland. However, International VIP Rebate normalised EBITDA was down 35.6% due to ‘market conditions’, unique VIP visitation was up 10% to record levels, but there was a lower spend per visit.
Net profit after tax (NPAT) before significant items rose by 17.1% to $216 million and statutory net profit jumped 33.7% to $198 million.
Star Entertainment Dividend And Balance Sheet
Star’s Board decided to pay dividends per share of 20.5 cents for the year, which was the same as last year.
Capital expenditure in FY19, excluding joint venture contributions, declined $157 million to $320 million which was consistent with guidance. There was also $105 million contributed to joint venture projects, mostly relating to Queen’s Wharf Brisbane and the first joint venture tower at the Gold Coast.
The gearing ratio, net debt divided by FY19 statutory EBIT, was 1.9x, which supports its investment plans.
Is The Star Share Price A Buy?
Star’s share price is close to a multi-year low, so it might be an opportunistic time to buy whilst there’s a lot of pressure on the industry with what’s going on at Crown Resorts Ltd (ASX: CWN). The company said it’s still a cautious consumer environment but has improved from the second half of FY19.
But I’m not sure in what direction VIP gaming will go in the shorter term and Crown Sydney could have a negative effect on Star Sydney. That’s why I would rather invest in the growth shares in the free report below.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.