Crown shares collapse after China detains staff
Crown shares nosedived yesterday after Chinese authorities detained 18 of its employees including the head of its international operations for high rollers.
Crown shares fell by a record 13.9 per cent, or $1.80, to close at $11.15.
The share price dive also hit New Zealand’s Sky City Entertainment, falling 4.1 per cent and Sydney’s Star Entertainment Group which fell 3.7 per cent.
In a note to the market, Crown confirmed that its executive vice president VIP International Jason O’Connor was one of the 18 detained.
“To date, Crown has not been able to speak with its employees and is working closely with the Department of Foreign Affairs and Trade to urgently make contact with and ascertain the welfare of its employees,’’ Crown said.
“Crown is yet to be provided with details of why its employees have been detained.”
According to Crown’s annual report, more than one third of the company’s revenue at its Australian resorts in Perth and Melbourne in the year ended June was generated by international visitors, mostly from China.
While casinos are not allowed to advertise on mainland China, Crown can still promote tourism and resorts where its casinos are located.
More than a third of Crown’s revenue at its Australian resorts comes from international visitors, predominantly mainland Chinese.
With the firm building a high-roller casino resort at Barangaroo on Sydney’s waterfront, the crackdown of Chinese authorities could have broader implications for Crown in Australia.
“Any setback could jeopardize returns on Barangaroo,’” Daniel Mueller, an analyst at Forager Funds Management told Bloomberg.
The share price dive is a sign that investors are worried with CLSA analysts saying Crown might have to shut down its direct VIP marketing operations.
Analysts are also saying that there is a question of whether the Chinese government is redefining what foreign casinos are allowed to promote in China and whether they are making an example of Crown. This could make it harder for Chinese to get money out of the country.
Macau is the only place in China where casino gambling is legal. Casino revenues in Macau have declined with the crackdown on corruption by China’s government which has kept Chinese high-rollers away from the hub.
That means other casino operators around the world would be vulnerable as high rollers could start avoiding those companies with casinos offshore.
As a result, China casino stocks fell with Sands China dropping 3.3 percent in Hong Kong, while Wynn Macau down 2.7 percent.
by Leon Gettler, October 18th 2016
