ASX 200 stock The Star Entertainment Group Ltd (ASX: SGR) plummeted to a record low of 18.25 cents in early trading on Monday as the embattled casino operator wrestles with a swatch of financial and regulatory challenges.
Shares have since moved slightly higher to swap hands at 19 cents at the time of writing.
Zooming out, there has been a gradual erosion of value for Star shareholders dating back to 2017, when the ASX 200 stock hit an all-time high of $5.17. See this on the chart below.
Once it peaked, Star never reached this price level again. Let's take a closer look.
Image source: Getty Images
ASX 200 stock hits all-time low
Star's troubles date back to findings of the NSW Independent Casino Commission (NICC)'s Bell Two Inquiry into the casino operator's internal conduct and corporate governance.
The Bell Two report "deemed The Star to be unsuitable to hold a Casino licence because of serious regulatory failures".
The whole saga has resulted in a number of headlines and mandatory changes for Star. One was the suspension of its casino licence to operate The Star Gold Coast.
This was supposed to roll into effect in December, but in an ASX announcement last Friday, Star advised that the Queensland government had deferred the decision until next year.
[Star] has been advised by the Queensland AttorneyGeneral and Minister for Justice and Integrity that the Governor in Council has determined that thsuspension of the licence for The Star Gold Coast casino has been deferred until 9:00am on 31 March
In addition, the Special Manager's appointment for The Star Gold Coast casino has been extended to 30 June 2025.
But Star isn't off the hook. The extension still comes with the exact same expectations it did before.
These include addressing "significant outstanding remediation matters," namely the issues highlighted in the Bell report.
The company is also required to report back to the Queensland Liquor and Gaming Regulation Commissioner in February, where the matter will be reviewed.
Whilst the news was posted after market hours last Friday and isn't price sensitive, investors haven't stopped selling this ASX 200 stock.
Challenges run deeper
It's not just the regulator that's got Star shares under pressure. The company's financials were soft in FY24 as well.
Revenue for FY24 reached $1.68 billion, but pre-tax earnings of $175 million were overshadowed by escalating debt obligations and a $1.4 billion non-cash impairment charge.
Star also secured a $200 million debt facility at a steep interest rate of 13.5% per annum shortly after it resumed trading from a month-long trading pause in September.
Servicing the new loan alone could cost the company $72 million annually in interest.
Investors have been heading for the exits, as well. Perpetual Ltd (ASX: PPT) recently sold off $26 million worth of Star shares, amounting to 4.5% of the company.
Meanwhile analyst support is hard to find, even at these depressed prices. Macquarie downgraded the ASX 200 stock to a sell in November, slashing its price target to just 20 cents.
Today's new low surpasses this level.
According to CommSec, no brokers currently rate the ASX 200 stock a buy.
Foolish takeaway
While this ASX 200 stock may look like a bargain at 19 cents, experts agree the risks might outweigh the potential rewards for now.
The casino operator has a mile of work to do, all whilst climbing a steep hill.
In the last 12 months, the stock is down more than 63%.
