The Star Entertainment Group Ltd (ASX: SGR) share price has hit it big.
At the close of trade on Friday, shares in the casino operator were trading for $4.25 – up 1.19%. The S&P/ASX 200 Index (ASX: XJO) ended the day 0.38% higher.
While the company hasn't made any market sensitive announcements since 19 August, something has clearly got investors excited.
Let's take a closer look.
Image source: Getty Images
It's a royal flush
The start of the Star's monumental rise through August and early September occurred when the company confirmed reports it was in negotiations with the NSW government to increase the amount of poker machines at its Sydney casino.
Previously, it was reported the Star could almost double its poker machine numbers at the resort. These would apparently come from rural regional pubs and clubs across the state. The impetus for such a move is an alleged concern of the government that money laundering is too easily facilitated at smaller venues as opposed to the Star. In its statement, Star pointed out it has about 1,000 fewer gaming machines at its Sydney venue than compared to facilities run by Crown Resorts Ltd (ASX: CWN).
The next day, the company released its full-year results and the momentum from this seems to really be carrying the Star share price higher and higher.
For FY21, Star Entertainment reported a revenue fall on the prior corresponding period (pcp) of 21%. It also recorded flat earnings before interest, tax, depreciation and amortisation (EBITDA) of $430 million. The company did not pay a dividend.
COVID-19 affected Star's performance for the worse during the financial year. Management said reduced operational capacity, particularly across Sydney and Brisbane, weighed heavily on earnings.
Looking forward, Star says the first half of this financial year will be negatively impacted by current restrictions in place in Sydney. It said persistent and uncertain restrictions "could materially impact revenues and earnings".
Despite these headwinds, investors might be confident the days of lockdown are drawing to a close and business will return for Star.
Star share price snapshot
Over the past 12 months, the Star share price has increased 37.1%. Year-to-date it is 13.3% higher. The company's 52-week high is $4.32 and its 52-week low is $2.97.
Star Entertainment has a market capitalisation of approximately $4 billion.
