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A tale of two Crowns in rollercoaster 2016

Fri, Dec 9, 9:23am by Staff Writer

While Crown Resorts began the year looking to focus its business efforts on the Australian market, the winds of change sweeping through the Asian casino landscape sees the growth of its overseas Melco Crown arm as a major talking point as 2016 comes to a conclusion.

Crown Resorts reduced its shareholding in its Macau joint venture, Melco Crown, to 27.4 per cent in May, as growth in the former Portuguese colony continued to slow, while the pursuit of other overseas markets under the Melco banner were proving more complicated than it had envisioned.

It then announced it intended to split the local and overseas arms of its business in June, while James Packer then reduced his shareholding in Crown Resorts to a 48.2 per cent stake.

But three key events have turned Crown’s 2016 on its head. The first was a rebound in the Macau market, the second was the detention of 18 Crown Resorts staff which looks to threaten the Chinese VIP market which fuels growth of the business in Australia and the third is the likely legalisation of casino gambling in Japan.

Crown Resorts share price with the ASX reached $13.89 in August but slumped as low as $10.40 after news of the arrests broke in October before recovering to be $12.06.

In contrast, it has been all upward trends for Melco Crown on the Nasdaq, with shares building from a low of $11.08 in July to $19.55 now.

And those fortunes for Melco Crown are likely to continue to rise with the Japanese Diet this week formally passing the Integrated Resorts Promotions Bill, which now awaits official ratification from the upper house.

An Integrated Resorts Implementation Bill is expected to be voted on early next year, which would pave the way for construction of casino resorts located near major cities in the next 5-10 years.

“These integrated resorts will be able to be enjoyed by families, not just [used] for business activities or conferences,” Japanese Prime Minister Shinzo Abe said this week.

Crown’s executive vice-president, strategy and development, Todd Nisbett, told The Australian late last year that Japan was high on the priority list for the company.

Japan’s proximity to China, Hong Kong and Southeast Asia, plus its more developed economy, is seen as a major plus for international investors.

Meanwhile, November numbers from Macau are expected to show an improved rebound in the world’s biggest casino market, further boosting Melco’s position.

However, in bad news for Crown Resorts, the outcome of the charges the 18 Crown Resorts Staff, which include three Australian executives, is not expected for months.

The arrests have put a halt to Crown’s marketing of its Australian operations into China, while Packer continues to keep a low profile in the wake of the scandal.

Recently, it was announced that the break-up of Crown’s businesses had been delayed and would not meet the initial timeline of nine months.

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