Shares in casino operator Echo Entertainment Group Ltd (ASX: EGP) soared 6.2% on Thursday, ending the day at a new 52-week high of $3.76.
The gains came after the owner and operator of The Star in Sydney as well as other casino venues in Queensland released a trading update.
According to the update, management expects to report normalised EBITDA for the first half of financial year (FY) 2015 in the range of $245 million to $260 million. Achieving this range will imply a gain of between 23% and 31% on the prior corresponding period.
Helping achieve the gains has been a very strong performance at The Star which year-to-date has experienced a 36% rise in normalised gross revenues. Likewise, the VIP division has performed exceptionally well, with VIP recording actual turnover of $16 billion and normalised revenues up 78% to $231 million.
Commenting on the results, CEO Matt Bekier said: “The positive trading momentum generated in 2H FY14 continues to prevail. We are experiencing good demand in all properties, especially in domestic electronic gaming. The International VIP Rebate business is breaking previous records. Expenses are tracking to expectations.”
The buying which is driving the share price higher is a far cry from that of a year ago when investors were fleeing the stock in the wake of Crown Resorts Ltd (ASX: CWN) triumph in successfully breaking into the lucrative Sydney VIP gaming market.
Once again fortune has favoured the brave with investors such as Perpetual Limited (ASX: PPT) a significant purchaser of Echo stock in mid-2013 when the share price was at a multi-year low enjoying large gains. The decision to purchase when many others were selling has paid off handsomely with the share price increasing 42% in the past year.
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Motley Fool contributor Tim McArthur owns shares in Perpetual Ltd.
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