NTA of Star Entertainment (SGR)
Hey Guys, New member and love your website and service. What would be the NTA if Star lost both casino licences. Cheers Rob
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Answer
Hi Rob,
A great question and one we’ve considered ourselves with SGR now only having a market cap. of $1.2bn, with a Net Asset Value (NAV) of $2.48bn (about $1 per share), the issue is there are a number of major assumptions involved in this valuation equation:
- Current 2024 debt is estimated to be $126mn potentially blowing out to around $570mn in 2025 as the casino operator gets hit with a number of heavy regulatory fines. This is unknown currently.
- The company is going to need its gaming revenue to start reducing these debt levels over the next decade, e.g. revenue in 2024 is Est. to be over $1.7bn falling to $1.42bn in 2025.
SGR owns and operates three casinos across Australia’s eastern seaboard. The Star, located in Sydney (NSW), is its flagship property, while its other two casinos are located in Queensland. The Treasury, located in Brisbane, and The Star, Gold Coast. Star Entertainment is also developing Queen’s Wharf in Brisbane with consortium partners Chow Tai Fook and Far East Consortium. The new casino is due to open in 2024.
If SGR loses its casino licence in NSW and/or the ones in QLD the business becomes a very different proposition and while the stock has been hammered over recent years we believe its share price will have further downside if this worst case scenario eventuates.
