Star Entertainment Group, the Australian gambling giant, reported on its fully-year numbers this week, showing that net profit climbed 15%. While the numbers missed market analysts' expectations, Star Entertainment benefited from record-high income from rich gamblers from Asia who flocked to Australia's casinos.
Net profit for Star Entertainment for the year to June 30th, 2016 was $194.4 million, said the group. Because the numbers were short of analyst expectations, shares dipped by 3% .
In a statement, Star Entertainment said that its profits grew due to "a combination of improved marketing, loyalty program, sales activity, product offering and stronger macro-economic conditions."
Chinese Crackdown Good for Business
Like other Australian gambling groups such as Crown Resorts ltd, Star Entertainment is tapping into the highroller Asian gambling market, capitalizing on the exodus of VIP players from the Chinese market in particular. In recent years, the Chinese government has cracked down on the casino industry in Macau, and Australian gambling groups have rushed in to service highrollers looking for alternatives in the region.
According to statistics, visitors from China to Australia in the year ending June 30th, were up 22%, making up the largest group of foreign tourists to the country (barring New Zealand).
Australian companies are accommodating these new players in different ways, as is in line with their strategies. Crown continues with its plans to build an impressive $2 billion casino on the Sydney waterfront, close to Star's flagship complex.
Star Entertainment, however, considered an investment in Brisbane a better bet. Not only is it well populated as Australia's third biggest city, but it is also more appealing to Chinese gamblers, being 1,000 km closer to Asia than Sydney. It addition, Asian players are attracted to Brisbane's warmer weather. All in all, Star plans to spend $120 million on the new Brisbane resort, as well as another $425 million expanding and improving on casinos in the Gold Coast and Sydney.
Star Entertainment's International VIP Unit
Star Entertainment's International VIP unit managed to net the company $49.5 billion in turnover from its three properties - a 7% increase year on year. Star markets tourist packages to highrollers across Asia, especially China.
According to Star CEO, Matt Bekier, the company has witnessed a shift in the classic VIP player's profile. "Instead of there being three players at $35 million each, we would see 100 players at $1 million each," said Bekier.