Macau-based gambling and casino company Melco Crown Entertainment Ltd on Friday announced that it would delist from the Hong Kong Stock Exchange, only three years after joining.
The company, which is 33.6% owned by Crown Resorts Ltd (ASX: CWN) and co-chaired by Crown Resorts chairman Mr Packer and Macau gaming identity Lawrence Ho, has been listed on the Nasdaq Stock Exchange since 2006 and cited the following reasons for delisting:
- "appropriate opportunities to raise additional equity in Hong Kong have not arisen, and the volume of trading in the shares on the stock exchange remains very limited."
- "maintaining the listing of the shares on the stock exchange requires additional ongoing regulatory compliance obligations and such requirements involve significant additional costs and administrative burden."
The change is expected to have little to no impact on ASX-listed Crown Resorts and analysts appear to agree that removing the listing will be a benefit over the medium term due to lower listing and compliance costs.
2015 Outlook
Investors in both Melco Crown and Crown Resorts will be hoping that 2015 is better than 2014. Last year represented the first fall in annual revenue for Macau's casinos since public records began in 2002. This resulted in an average 40% fall in the share price of the six Hong Kong-listed casino operators, potentially as a result of a crackdown on Chinese corruption. This has also seen Crown's share price fall amid lower earnings forecasts from Melco and uncertainty around future returns.
Crown is (either directly or via its subsidiaries) investing in new Casinos in Macau, Sri Lanka, Las Vegas, and Sydney, and is in the running to develop new casinos in Brisbane and Japan, however the expected returns on these investments are still unknown to investors.
No News Here
Essentially nothing has changed for Crown or its shareholders. 2015 will be another year of consolidation and construction towards the opening of new casinos in the back half of the decade. For long-term investors Crown represents one of the best growth opportunities available and should reward investors closer to the completion of new Casinos.