A few times over recent years, we considered SGR as an aggressive “punt”, though not an investment-grade proposition for MM. However, management has continued to disappoint shareholders and the regulator on many issues, making us feel “what next”. We see further regulatory risks ahead for the company, including the ongoing fallout from the 2nd Bell Inquiry in NSW, plus potential negative revenue impacts from the introduction of responsible gameplay mechanisms. On the positive side, we see upside risk from returning tourism, and we believe the opening of Queens Wharf later this year could be a positive catalyst for a company that is trading at a steep discount relative to its asset base..
Pokies magnate Bruce Mathieson has been creeping up the SGR register, with the family company now holding 9.6%. Some corporate activity may be on the horizon, but in our opinion, it’s not a stand-alone reason to go long SGR.
- We have mixed views around Star, continued earnings risk on one side versus an attractive asset base on the other.
MM is neutral toward SGR
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