Shares in James Packer's Crown Resorts Ltd (ASX: CWN) fell 1.78% on Friday morning after the Melco Crown entity it has a one third ownership interest in announced a quarterly revenue decline of 7% across its Asian operations.
Melco Crown Entertainment Ltd (NASDAQ: MPEL) (SEHK: 6883) owns, operates and develops casino and entertainment resort facilities across Asia and Crown Resorts' ownership interest has been the Royal Flush hand investors believed could help them clean up without taking big risks.
While Melco's flagship City of Dreams casino delivered flat revenues, its smaller casinos and electronic-gaming style cafes posted revenue declines in what remains an extremely competitive Macau gaming market.
Melco Crown still intends to expand further across Asia, by opening its City Of Dreams Manila resort, in the hope of replicating the success of its Macau-based venture. James Packer's Hong Kong-based alter ego, Lawrence Ho, as chief executive and co-chairman is the man responsible for driving Melco Crown's growth in Asia, which includes potential openings in Sri Lanka and jackpot-market Japan.
Crown Resorts has also announced ambitious plans to develop a casino in Las Vegas, announcing on Monday that it had spent US$280 million on acquiring a development site on the world famous Las Vegas Strip. Crown's last attempt at moving into Las Vegas was poorly timed, just before the GFC, and resulted in substantial costs to shareholders.
Crown's shares are now down nearly 7% since the Las Vegas announcement and 11.5% since the start of 2014.
Crown of course remains a proven operator in Australia with excellent leverage to the growing wealth of the Asian middle-class. However, at $14.95 it trades on more than 17 times earnings and is priced for success. It may face further selling pressure until a definite reversal in the Macau outlook, while the increasingly high-stakes game it's playing in chasing overseas development presents added concerns.
