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I would also add that VIP gaming is one of those strange...

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stillade

1,453 Posts.

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21/10/16

19:44

Post #: 20041469
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Originally posted by Austro22 ↑

Slide 5 of AGM report shows that VIPs account for $879.3 mil in revenue not $71 billion (though $65 billion in 2016) rather the total turnover is $65 billion. The theoretical win rate is 1.35% in 2016 it was 1.42% so really only 1.42% of that $65 billion comes into the balance books. CWN profit margin across the board is around 12% (the VIP gaming is actually far less as stated in this release). If Crown was to lose the its entire Chinese VIP gaming it would lose 12% of its revenue and leads to a less than 12% drop in profit. This is clearly oversold.

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I would also add that VIP gaming is one of those strange businesses that, up to a point,actually sees profit margins improve slightly as revenue declines, so long as it doesn't decline completely. This why they have made a point of saying in the announcement that, although Chinese mainland VIP revenue accounts for approx 12%, the hit to the bottom line is much less.
Agreed, this is oversold.

Last edited by stillade: 21/10/16

CWN Price at posting: $10.92 Sentiment: Buy Disclosure: Not Held
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0 Great analysis

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