Shares in Crown Resorts Ltd (ASX: CWN) edged higher in afternoon trade after the casino and hotel operator announced it has gained further approvals from the NSW Planning Assessment Commission (PAC) for its Crown Sydney Hotel Resort at Barangaroo South.
The plans for a Syd-Vegas style complex on Sydney’s harbour front have been approved subject to a “number of substantial modifications and conditions which are currently being reviewed by Crown”.
The delays to the Sydney project due to wrangling between Crown’s management team and the PAC have weighed on its share price recently as the company remains heavily indebted due to its building projects in Sydney and overseas.
The other anchor on the share price has been the declining revenues at its Macau-based Melco Crown Entertainment joint venture. The Macau slowdown took the market by surprise as consistent revenue growth from the region was previously considered something of an article of faith by investors who saw Crown as a smart play on the growth of the Asian middle class.
Crown has also come under criticism from institutional fund managers in recent times for strategic decisions that included taking a 20% stake in the Nobu restaurant chain for US$100 million. James Packer was reportedly hungry to make the deal with Nobu’s other majority owners including the eponymous celebrity chef and Robert De Niro.
Largely in response to the institutional selling the business announced some radical changes to its operating structure on June 15 in an attempt to unlock value and secure the funding to complete its ongoing development projects. As part of the makeover, Crown will be split between its Australian and international gaming assets.
For investors looking to leisure and tourism stocks with the tailwind of a lower New Zealand or Australian dollar I would prefer Auckland-based business SKYCITY Entertainment Group Limited-Ord (ASX: SKC). It trades on a superior valuation with more long-term upside in my opinion. However, Crown’s high-quality Australian casino assets including its dominant Melbourne casino are also likely to be sought after by investors if the proposed demerger is enacted.