3 reasons it's time to pick up Crown Resorts Ltd shares

Short-term price weakness could be a bargain opportunity.

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In the last two months, shares in Crown Resorts Ltd (ASX: CWN) are down almost 13%, so the integrated resort and casino operator may have pulled back far enough from a March price peak to be attractive.

What: The stock began rising in February after the company announced a strong half-year performance. Its normalised net profit was up 29.4%, mostly due to the rising value of its stake in the Melco Crown (NASDAQ: MPEL) joint venture company.

It wasn't enough to push the share price past the earlier 52-week high of $18.22 set in January. It's about $15.60 currently.

Now What:   This may be an opportunity for investors to take advantage of short-term price weakness. Here are three things that could drive future growth for Crown Resorts.

1)  New dividend income –     Melco Crown, of which Crown Resorts owns a little more than a one-third shareholding in, will pay a dividend for the first time. The exact dividend amount hasn't been released, but it plans to pay 30% of its annual consolidated net profit on a quarterly basis. This helps Crown's bottom line and provide extra funds for capex and development.

The company may also receive roughly US$64.2 million in addition, if a special dividend payment is approved by Melco Crown shareholders.

2)  Asian casino market growth –     The growth in casinos and integrated resorts in Asia still keeps on rolling along. Apart from gaming venues Melco Crown has in Macau, the Las Vegas of Asia, the joint venture is branching out into the Philippines with a new integrated resort opening this year. It plans to develop its "City of Dreams" resort brand in Sri Lanka next.

If Japan and South Korea, which are considering changing their gambling laws, allow casino development, Crown Resorts has a great opportunity to expand into those potentially big markets.

3) Australian expansion –     Crown's future Australian growth will come from the proposed VIP gaming venue which will be part of a six-star hotel being developed together with Lend Lease Group (ASX: LLC) at Darling Harbour. This will put it in direct competition with Echo Entertainment Group Ltd (ASX: EGP), which operates The Star Casino in Sydney.

The company will also be competing for approval to build a world-class integrated resort in Brisbane. Currently, Echo Entertainment Group has the only casino, The Treasury, in Brisbane. If Crown is successful, it will open up two major cities where it has no current casino operations.

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned.   

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