Crown Resorts Limited, operator of Australia’s largest casino, has seen bond risk for the company rise over the past three months as China’s corruption crackdown and lower gaming revenues hurt its Macau-based venture, Melco Crown Entertainment.
“Melco constitutes a significant portion of Crown’s overall earnings profile, so given the weakness in the market there, that certainly is being reflected in expectations for future profits,” said Michael Bush, Melbourne-based head of credit research at National Australia Bank Ltd.
Crown’s net income was AUD$526 million (USD$386 million) for the year ended Jun. 30, down 18 percent from 2014. Profits received from its Macau venture, slumped 45 percent to AUD$129.9 million.
In a meeting in October, Crown Chief Executive Officer Rowen Craigie was confident of the long-term play for Macau based Melco Crown, despite declining gaming revenue in the region. “Macau is currently experiencing a difficult period which has adversely affected all casino operators. However, MCE believes that through the strong leadership from the Macau and Chinese governments, the ongoing build-out of significant local and regional infrastructure, together with an expanding and increasingly affluent Chinese middle-to-upper-class, Macau remains the world’s most important and exciting gaming market over the longer term.”