Crown Resorts Ltd (ASX: CWN) can finally get going on its Crown Sydney development. When you have a number of billion-dollar casino projects in your pipeline, time is of the essence.
Property developer Lend Lease Group (ASX: LLC) is in charge of construction for the Barangaroo South development in Sydney, where three towers will be built. In one of them will be a six-star hotel and VIP gaming venue Crown Resorts will operate.
The casino opening is set for 2019, but Lend Lease's negotiations with the NSW government over division of the profit share have held up the planning process for around a year. A new deal agreement has ended the delay and puts the development back on track.
Echo Entertainment Group Ltd (ASX: EGP) operates Sydney's only casino The Star and has an exclusive gaming licence for the Sydney region until 2019. Crown's proposed hotel and gaming venues have to be ready to start from day one when Echo's exclusive licence period ends.
Getting this development back on schedule is essential for James Packer's company's long-term business expansion, especially when business growth currently is subdued.
Crown Resorts reported half-year earnings down 31.4% before significant items. Its Australian business revenue was up 16.1% to $1.63 billion, but performance is still affected by poor consumer sentiment.
Earnings from its joint-venture owned City of Dreams casino in Macau were hit following the Chinese government's crackdown on money laundering and corruption in the Macau gambling market. Another venue called "Studio City" will open later this year and the new City of Dreams integrated resort in Manila had its grand opening last month. These two new venues may help revenue growth, but earnings could still sag from initial running costs.
Crown Resorts' share price is up recently after reporting lower interim earnings. If the Macau casinos can adjust to make more money from mass market gaming to offset the lower VIP gambling revenue, things could turn around in the short term. Crown definitely needs time to grow, yet long-term investors could justify starting a position now.
