(Asx: SGR) | Star Entertainment Group Limited.

Oct 26, 2021

Sentiment: Sideways

Type of Trade: Aggressive

Industry: Travel & leisure

Sector: Consumer Discretionary

The company operates in the gaming, entertainment and hospitality industries. THe company owns and operate The Star Sydney, Treasure Casino and Hotel, Brisbane (Treasure Brisbane), and Jupiter Hotel and Casino, Gold Coast.

✅ The group has delivered a sound performance across FY2021 despite the extraordinary COVID-19 related challenges.

✅ Comprehensive action to mitigate the impact of COVID-19 were implemented across The Star.

✅ Unchanged Long term Strategy, with the execution of the strategy continuing across FY2021 and FY2022 despite COVID-19 Disruption.

✅ Statutory EBITDA up 51% to $427M despite COVID-19 and Sydney Impact with Brisbane and Gold Cost showing 3 digit growth and majority of the impact being registered FY20.

✅ Net Profit After Tax (NPAT) up 458.3% after the massive decline of FY20 showing a very resilient business with QLD cassinos to continue to operate.

✅ No dividend was paid, holding the value of the stock during the Pandemic.

✅ The group has taken an Sustainability Approach with NET-ZERO by 2030 for wholly owned and operated asset, by reducing 30% in carbon intensity by 2023, 30% reduction in water by 2023, 100% takeaway food packaging to be compostable, and 90% of The Star’s portfolio to attain green ratings.

Key Projects in the Pipeline

✅ Commencement of work on a second $400 million hotel and apartment tower at The Star Gold Coast with expect opening of the Dorsett hotel and The Star Residences tower at The Star Gold Coast.

✅ 2023, expected opening of Queen’s Wharf in Brisbane.

🚩 The company has been accused of enabling suspected money laundering, fraud and organised crime at its casinos. It is important to remember that the The Star Group operates in a heavily regulated industry. The company is already subject to thorough and ongoing regulatory oversight including compliance checks and reviews across the company’s operations in NSW and Queensland.

Technical Analysis

If you have bought (Asx: SGR) 52 weeks ago, you would have made 1% gain. Over the last 12 months SGR has showed to be a very interesting trading stock but not an investment stock.

SP has fallen by 31% after the allegation of crime and money laundry by the group’s Sydney and Brisbane operations. High volume to the upside and low volume to the downside, shows the market is still bullish about this stock and we could potentially see SP back above $4 mark.

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