What Happened? The share price Australia's favourite major gambling company, Crown Resorts Ltd (ASX: CWN), has surged an impressive 19% in October following a few positive developments and renewed confidence in the group's Asian expansion.
Why Should You Care? Crown's share price has fallen heavily from a high of $16.12 back in February.
This month's AGM saw Crown's management team spend plenty of time reiterating why it sees a great long-term return coming from its investment in Macau. Management noted that while the Macau gaming market is entering its seventeenth consecutive month of declining revenue, they believe that it remains the most important gaming market in the world over the long term.
To highlight this point, Crown cited that Macau's gaming market is around five times the size of the market in Las Vegas and the Chinese travel restrictions to the area are slowly being relaxed, hopefully prompting a resumption of income growth in coming years.
So What Happens Now? I believe that Crown is setting itself up perfectly for the next 10 years. Crown noted that China's outbound tourism market is forecast to increase by 85% over the next five years, of which some of the biggest beneficiaries will be Australia and the US.
Crown's Australian operations are already dominant and the addition of a new Casino and entertainment precinct in Sydney will only aid this dominance. Crown has also purchased a block of land in Vegas (for around 10% of the price it was purchased for pre-GFC) which it will develop over the next decade to boost its reach.
Add this to the group's solid footing in Asia and I believe Crown's setup incredibly well to take advantage of the world's gambling addiction. Crown also offers a fully-franked 3.5% yield which analysts expect can be sustained and grown over the long term.
