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Brokers back Star Entertainment Group Ltd’s growth projects

Brokers have weighed in on growth strategies kicked into gear by leisure and entertainment player Star Entertainment Group Ltd (ASX: SGR).

Star has raised $490 million to expand its partnership with two Hong Kong businesses – Cho Tai Fook and Far East Consortium – in a move to increase its appeal to overseas visitors and boost dividend payout ratio’s for shareholders.

Morgan Stanley has thrown its support behind Star’s alignment with the Hong Kong partners, joined by Ord Minnett, who expect the alliance to “drive hotel occupancy and visits to the company’s gaming venues”.

Citigroup sees the alliance as representing the best interests of all parties, expanding Star’s customer base while both Hong Kong companies will hold a 4.99% position in Star Entertainment.

UBS think the alliance will provide “certainty” for Star’s future, which is good news for investors already buoyed by the new dividend policy – which sets distributions to between 70% and 90% of normalised NPAT.

Shares in Star were down slightly to $5.19 at the time of writing, not far from its $5.51 share price at this time last year but a far cry from its February high of $6.38.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Scott Phillips.

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