Renowned credit rating agency Fitch tips Crown Casino to absorb next year’s slow start and stay on track with its multi-billion-dollar Sydney casino that opens next year.
Fitch believes that Crown has positioned itself quite well during the difficult period and will reap the rewards from their prudent approach in the coming year.
The agency affirmed the BBB credit rating of the company and said that it is the result of the positive outlook of both the Melbourne and Perth casino venues.
Challenges to Overcome
Crown casino currently faces a couple of challenges that make the casino’s operations more complicated than they should have been in this time of crisis.
The first challenge is the international tourism restrictions, particularly on Chinese high-rollers. This restriction means that the casino can no longer entertain VIP players. These players are estimated to provide around 25 percent of the casino’s revenue and are considered Crown’s primary income source.
Another hurdle is the ongoing inquiry into the casino operator’s license. It is this issue that has become a real problem for Crown Resorts.
As the inquiry continues, more and more Crown officials’ testimonies indicate that the Casino board was aware of Crown’s junket partners and VIP guests being involved in criminal activities.
As if that wasn’t bad enough, it was also discovered that the casino offered unreported bank accounts to international high-rollers to hide the money they gambled with.
Well-Positioned to Make it Through the Storm
However, Fitch did not focus on this in their report and decided not to mention the ongoing NSW inquiry. It is very unclear why they did that.
Instead, the credit rating agency only dealt with its balance-sheet strength and how that affects Crown’s operations next year.
In their report, Fitch said that Crown Resorts skipped their final dividend, even though it has a fixed dividend policy. This shows that they are dedicated to meeting their obligations and completing the massive Crown Sydney project.
They also mentioned a brilliant move to secure over $1 billion in debt facilities before the pandemic struck. This enabled Crown Resorts to manage through the disruptions and absorb the shutdowns’ effects much better than competitors.
Fitch then insists that this prudent financial approach is why Crown will absorb the slow start once casinos reopen, and the looming recession is bound to hit Australia.
Not So Reliant on VIP Players After All
The credit rating agency also noted in their report that Crown’s reliance on the VIP business is not as people think. They reported that since the 2016 financial year, the VIP segment had made less than 25 percent of Crown’s revenue.
And while a quarter of the total revenue is not a negligible amount, Fitch predicts that Crown’s Melbourne and Perth properties will compensate for that.
In their report, Fitch also mentioned that Crown would continue to benefit from the predictable local markets. The stable cash they had generated for the company in the past few years will come in handy.
The main casino workers union and the Hard Rock Atlantic City casino reconciled their differences and agreed on a…
Thailand is thinking of legalizing casinos and the government has already asked a House committee to look…
Twelve casino workers were accused of cheating in Daegu, South Korea after the Daegu District Prosecutor's…
Chicago's Mayor Lori Lightfoot announced that the new Bally's casino has already paid the US$40 million upfront…
Chinese authorities have released the much-anticipated Macau gaming bill. Even though it is a final draft version, the…