Why Crown Resorts Limited’s share price just rose 4% on its result

Credit: soundingblue

The Crown Resorts Limited (ASX: CWN) share price has risen by 4% in early trade after it reported its half-year result for the six months to 31 December 2017.

Crown Resorts is the operator of Crown Melbourne, Crown Perth and Crown Aspinalls.

Below are some its highlights compared to the prior corresponding period.

Crown reports its normalised results to adjust for and exclude the impact of any variance from the theoretical win rate on its VIP program play. Crown thinks this is the best measure of performance, as it removes the volatility of VIP gaming revenue.

In its key Australian Resorts segment Crown grew normalised revenue by 4.8% to $1.55 billion, with main floor gaming revenue up by 0.7% to $859.6 million and non-gaming revenue up by 6.6% to $390.1 million. Australian Resort normalised earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 3.4% to $454.1 million.

The Australian Resorts saw VIP program play turnover of $22.6 billion, which was an increase of 15.9%. This was good to see after the Chinese debacle last year where several Crown employees were arrested, which scared off a lot of Chinese VIP high-rollers.

Crown’s total normalised EBITDA grew by 11.2% to $447.7 million and normalised earnings before interest and tax (EBIT) grew by 15.2% to $297.7 million.

As expected, Crown declared an interim dividend of 30 cents per share, franked at 60%. This matches management’s intention to pay annual dividends of 60 cents per share.

Normalised net profit after tax (NPAT) attributable to Crown shareholders grew by 0.6% to $192.4 million.

However, reported NPAT fell by 33.6% to $238.6 million after significant items were taken into account. The main reason for the fall was that the previous period included a $166.9 million net gain on the sale of its share of Melco Resorts & Entertainment.

Management reminded investors that Crown intends to implement its on-market share buy-back of up to 29.3 million shares on or after 23 February 2018.

During the half Crown entered into an agreement to sell its 34.6 acre vacant site on Las Vegas Boulevard for US$300 million to a subsidiary of Wynn Resorts Limited. The gain on this sale is US$83.8 million. The sale was completed with an announcement on 29 January 2018.

Crown has also sold its interest in part of the property and operations at Ellerston in the Hunter Valley for $62.5 million, this was completed on 2 February 2018. Crown also completed the sale of its 4.2 million shares in Caesars Entertainment Corporation for US$53.3 million.

Finally, Crown has entered into an agreement to sell its 62% stake of CrownBet, as well as the loans advanced to it, for $150 million.

Management also gave an update on its two large projects.

Construction of the Crown Sydney Hotel Resort is progressing on schedule with the tower foundations complete, the main structure starting to rise and approximately 75% of the total trade subcontract value awarded under fixed price contracts. It aims to open during 2021 and Crown is starting to sell some of the apartments there.

The new six-star hotel in Melbourne, called One Queensbridge, has received conditional planning approval for the planned 388 room hotel and around 700 apartments. The hotel still requires financing and long-form agreements.

Crown Executive Chairman, Mr John Alexander, said “Crown’s Australian operations’ first half result reflected mixed trading conditions…VIP program play turnover in Australia of $22.6 billion (up 15.9%) was a pleasing outcome, particularly at Crown Melbourne (up 37.5%), given the difficult trading conditions in the prior corresponding period.”

Foolish takeaway

Overall, I thought this was an encouraging report after the troubles it has suffered over the past year or two. It could grow over the long-term with its Sydney project and it could be a decent income stock in the short-term with a partially franked dividend yield of 4.62%.

If you like the idea of a growing dividend stock, you’ll love this fast-growing business.

OUR #1 dividend pick to grow your wealth over the new financial year is revealed for FREE here!

Financial year 2018 is here and The Motley Fool’s dividend detective Andrew Page has revealed his must buy dividend share to grow your wealth in 2018.

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Crown Resorts Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.