Star Entertainment share price tumbles alongside sinking revenues

ASX 200 investors are pressuring the Star Entertainment share price on Friday.

| More on:
Young man sitting at a table in front of a row of pokie machines staring intently at a laptop. looking at the Crown Resorts share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Star Entertainment Group Ltd (ASX: SGR) share price is sliding today.

Shares in the S&P/ASX 200 Index (ASX: XJO) casino operator closed yesterday trading for 55 cents. In morning trade on Friday, shares are swapping hands for 53 cents apiece, down 2.4%.

For some context, the ASX 200 is down 0.5% at this same time.

This comes following the release of Star's third quarter trading update for the three months ending 31 March (Q3 FY24).

Read on for the highlights.

What happened during the quarter?

The Star Entertainment share price is dropping after the company reported a 4.6% year on year decline in net revenue. Net revenue for the quarter came in at $419.2 million, down from $439.5 in Q3 FY 2023.

Management said that revenue from Star's Premium Gaming Rooms (PGRs) slid across all of its properties during the quarter. The Star Sydney PGR revenue was down 19.3%; the Star Gold Coast PGR revenue was down 20.0%; and Treasury Brisbane PGR revenue was down 28% from Q3 FY 2023.

The revenue slide was softened by strong performance across the company's Main Gaming Floor (MGF) segment, which increased at all Star's properties. MGF revenue increased 5.4% at the Star Sydney; revenue was up 4.6% at the Star Gold Coast; and revenue increased by 6.4% at Treasury Brisbane compared to Q3 FY 2023.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) of 37.9 million were down 11.5% from $42.9 million reported in the prior corresponding period.

And while losses improved year on year, the Star Entertainment share price is still under pressure with the company reporting a net loss after tax of $6.8 million for the three months. That compares to a net loss after tax of $49.7 million in Q3 FY 2023.

On the cost front, operating expenses dropped 4.2% year on year.

However, Star has been increasing investment in its risk, controls and transformation teams to strengthen the control environment. This sees operating expenses up $1.8 million on the monthly run-rate from the first half of FY 2024.

Operating expenses in the first half of FY 2024 average $90.3 million per month. In Q3 FY 2024 this increased to a monthly average of $92.1 million.

Management said they "will continue to exercise cost control with a focus on making the appropriate investment in improving the control environment".

Looking ahead, Star said that negotiations for the sale of assets including the Treasury Casino, Hotel and car park "are progressing well".

The company also reported that the phased opening of Queen's Wharf Brisbane in August 2024 remains on track.

Star Entertainment share price snapshot

The Star Entertainment share price is down 55% over 12 months. The past month showed some signs of recovery, with shares up 1% over the month.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

Business people discussing project on digital tablet.
Earnings Results

Results in! This ASX 200 stock is rising despite falling half-year profits and dividend cut

Let's see how the company performed during the six months.

Read more »

A photo of a young couple who are purchasing fruits and vegetables at a market shop.
Consumer Staples & Discretionary Shares

The Woolworths share price has dived another 8% in a month. What now?

It hasn't been a super month for this retailer. Will things change? Here's what analysts say.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Consumer Staples & Discretionary Shares

1 magnificent Australian stock down 80% to buy and hold

Analysts think this beaten down stock could have major upside potential.

Read more »

A woman looks at a tablet device while in the aisles of a hardware style store amid stacked boxes on shelves representing Bunnings and the Wesfarmers share price
Retail Shares

Wesfarmers shares are down 7% from a 52-week high. Can they recover?

Down but not out. Is this a buying opportunity?

Read more »

JB Hi-Fi staffer helping customer share price
Retail Shares

Harvey Norman share price lifts as franchise continues growth

Consumers might be spending again.

Read more »

Two funeral workers with a laptop surrounded by cofins.
Consumer Staples & Discretionary Shares

One under-the-radar ASX 300 stock with 'inbuilt growth'

A funds management team is a fan of this ASX share.

Read more »

Robot hand and human hand touching the same space on a digital screen, symbolising artificial intelligence.
Consumer Staples & Discretionary Shares

Coles shares lift amid AI agreement with Microsoft

The supermarket giant is partnering with the tech giant to boost its AI capabilities.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Consumer Staples & Discretionary Shares

A2 Milk shares rocket 18% on guidance upgrade and big dividend news

The infant formula company is finally going to start paying dividends to shareholders.

Read more »