Like people, every company on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is different.
Different strengths; different weaknesses, and all have a story to tell. Luxury entertainment company Crown Resorts Ltd (ASX: CWN) is still in the opening chapters of what could be an incredible story. The company still has a long way to go, but here are six things only Crown Resorts investors will truly understand about the company:
1. It's been a tough start to the year
The first quarter of the 2015 financial year was tough for Crown Resorts. "The punters are killing us!" is how Chairman James Packer described it. The company's VIP business was $100 million below expectations and softening demand in Macau drove down the company's first half results.
The company's share price has reflected these slower conditions, up just 1% in 2015 compared to a 3.8% rise for the S&P / ASX 200 (Index: ^AXJO) (ASX: XJO).
2. Not a casino; a brand
One of the most essential things Crown investors understand is that, more than being a casino operator, Crown Resorts is building a global luxury brand. Hotels, resorts, restaurants, entertainment, events and retail shopping are all stamped with Crown's service and grandeur.
From aligning with Heston Blumenthal's exclusive The Fat Duck restaurant at Crown Melbourne to the $100 million acquisition of three private jets; Crown is synonymous with exclusivity and big money.
3. That "six-star" doesn't really exist…
The labelling of Crown's planned Perth Towers and Sydney hotel as "6-star" is an extension of Crown's branding. But do six-stars even exist? Not really.
Apparently there is no universal definition of a 'six-star' hotel. Renowned hotel ratings group Forbes Travel Guide still only goes up to five-stars, while online rating sites like Tripadvisor and Expedia also only go up to 5-stars. Rather, the label is self-imposed and designed to distinguish Crown as being top of the hotel food-chain.
Above: Crown Resorts "six-star" Perth Towers design. Source: crownresorts.com.au
4. Signs Macau gaming slump is bottoming out
Plummeting gross gaming revenues in Macau have been bad for Crown Resorts. But there are signs that the slump is nearing the bottom. Gross gaming revenues declined 39% in March according to Bloomberg, but slowed for the second consecutive month.
A stabilising outlook for Macau revenues will let the dust settle from the explosion in development and let the local government plan for a sustainable tourism industry.
5. Crown is set on global domination
From the saplings of Crown Melbourne and Crown Perth, Crown Resorts is rapidly branching out into the world. Crown has plans to grow into Las Vegas and has entered the race for Brisbane's prime Queen's Wharf location, while Melco Crown has helped the company expand into the Philippines with the freshly opened City of Dreams Manila.
6. What to watch out for
In addition to Macau, Crown investors know to watch out for the potential impact of the slowing commodity cycle on Crown Perth, especially given the $645 million investment in Crown Towers Perth set to open in late 2016.
