Opinion: Crown Resorts has left investors in the dark with its failure to give guidance on the impact of the coronavirus at its casinos | EKnightOfficial
Its flagship Melbourne casino experienced flat main floor gaming revenue against the previous corresponding period. This mass market result was far softer than analysts had anticipated and suggests conditions had declined considerably since the company’s annual meeting last October.
In large part the slump in VIP performance, which is also below analyst expectations, has been attributed to the negative media publicity surrounding its use of junket operators with links to organised crime.Its actual statutory earnings were well in excess of the "normalised" earnings - which is the number investors focus on.Normalised earnings are arrived at after applying a theoretical win rate to turnover – this removes the luck element . In Crown Melbourne’s case, it experienced a win rate of 2.3 per cent compared against the theoretical win rate of 1.35 per cent. The actual win rate during the six months to December 2018 was 1.02 per cent. Translated into dollars and cents – “Normalised VIP program play revenue was $140.9 million, down 39.6 per cent on the previous corresponding period with turnover of $10.4 billion. "Actual VIP program play revenue was $239.6 million, up 39.8 per cent on the previous corresponding period." Normalised earnings before interest tax and depreciation and amortisation for the Melbourne casino was down 14.7 per cent but the actual EBITDA was up almost 23 per cent. This suggests the Melbourne casino did well in the six months to December 2019 but the punters didn’t. Meanwhile, in the absence of any meaningful update on the international VIP market Crown’s share price see-sawed throughout the day.
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