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CWN

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$12.09 crown resorts limited

As a long term shareholder I am perplexed as to why the value of...

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Wayno14

101 Posts.

5

16/03/19

17:25

Post #: 37785442
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Originally posted by AvalonDays: ↑

I've been in and out of CWN several times over the last decade. I've not owned it in the last 2 years but recently took a very close look.

My take on the investment case for Crown is as follows:

1) In recent years the company has delivered EBITDA ranging from $800m to $900m approx per annum;
2) The company is currently trading st circa 10 times EBITDA, which is absolutely not stretched when you consider the rarity of its assets and the quality of the operation;
3) The company has net debt of zero. It's got circa 1 billion in long term debt and 1 billion sitting in cash;
4) Note that the company could choose to eliminate its debt from current resources. Note that the company also delivers circa $800 to $900m EBITDA per annum. Remember the DA in EBITDA is non cash and in the case of this company there is effectively no "I" in EBITDA due to the lack of net debt. Why mention this? Well it does not take long to eliminate debt entirely with normal operational cashflow.
5) Go back 10 years and analyse this company's sales per share. In the GFC and also in the euro sovereign debt crisis the punters kept gambling.
6) Around 75pc is CWN's revenue is sourced from Melbourne Crown. While sell side analysts value Melb Crown at circa $7bn, I will be a tad more conservative and put it at $5b to $6b. Why is this figure relevant? Because of Sydney Crown.
7) CWN recently noted in its market update that the total cost to build Sydney Crown remains at $2.2bn, but with the end value of the luxury resi component of the building anticipating $800m, the net effective cost for the asset is $1.4bn. Niw Sydney Crown is of course not going to be larger than Melbourne Crown, with its lack of off the street public access, but I'm willing to bet its entertainment options and hotel plus the VIP casino are going to be very very attractive assets to own. The asset is going to be become Sydney's tallest building and will without doubt be iconic sitting right behind the opera house next to SHB as you gaze down the harbour from east to west. It's going to be an exceptional building that nobody is talking about at the moment because nobody can see it. But, it's coming out of the ground now.
8) The additional EBITDA boost from Sydney Crown, coupled with the fact that even once that asset is built CWN could be sitting at ZERO debt in just a few with its organic cashflow make this a compelling addition to my portfolio.
9) Dividend today provides 6pc (grossed up for franking).
there is my counter to the previous negative comments I've seen on this stock on previous posts. I've been investing for 25 years plus. I've now added this to become on of my 5 largest investments in a 90 plus global portfolio.

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As a long term shareholder I am perplexed as to why the value of Crown share price is so low. Very disappointed. Thought a long timthe tope ago the share price in 2019 would be hovering around the $20 mark. Need some encouraging news from the top!

CWN Price at posting: $11.79 Sentiment: Buy Disclosure: Held
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0 Great analysis

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