The Crown share price recently has taken a beating after the revelations from the NSW liquor and gaming inquiry showed the incompetence of the management and board to the whole world.
The backdrop of limits on international tourism and the shutdown of Melbourne where it makes up a largest share of its earning is not helping the overall sentiment on the stock.
The Australia Stock Exchange 200 largest stocks are dominated by financials and resources. CWN was one of the rare opportunities outside of the financial or mining shares which provided good diversification exposure to the tourism and entertainment sector in our Australian equity portfolio.
CWN Thesis
Crown for a period was a core portfolio holding and one of best shares to buy. The overarching thesis of owning an integrated Casino and Resort operator was simple, the house always win. CWN in turn not only operated Casinos but also had a reasonable development pipeline.
The Crown Sydney which had been years in the making is finally come online. On completion, Crown will own a marquee Casino in two of Australia’s gateway in Sydney and Melbourne. This will reorient its earning base from overseas back to Australia and the exit of its international portfolio means that it’s earnings is less susceptible to shifts in the Australian to US Dollar.
The Interesting
One of Blackstone’s funds acquired a large chunk of the shares. It could be during the post covid share market recovery the funds could not buy any asset directly fast enough and purchased assets on the listed market as quick proxy to take advantage of fall in asset prices. However private equity funds are not known to sit on listed shares and there could be something being worked out in the background.
Risks going forward
The question is has all the bad news been flushed out? We won’t know until the NSW liquor and gaming commission has completed its findings and issued the final report.
However given where the CWN share price is trading the damage looks to be mangable for now. The immediate completion of Crown Sydney derisk the company somewhat but equity investors always have a short memory and before soon enough they will ask where the growth will come from.
CWN Dividend History
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CWN dividends has been consistent at 30 cents per interim and final dividend periods. Crown Interim and final dividends are paid in April and October every year.