Deutsche Bank notes Star Entertainment has been shortlisted for the Cairns global tourism hub. Proposals are to be lodged by July with a decision to be made late in 2019 or early 2020.
The broker believes such a project will need to involve the current licence holder, Reef Casino JV, as the market is not large enough to sustain two casinos. If successful, Deutsche Bank believes Star Entertainment could include its Asian JV partners and fund the project off balance sheet.
The broker estimates the investment would likely be in the order of $300-400m and the company could reduce its equity contribution to just $30-40m if involving the JV. Buy rating and $5.60 target.
Sector: Consumer Services.
Target price is $5.60.Current Price is $4.36. Difference: $1.24 – (brackets indicate current price is over target). If SGR meets the Deutsche Bank target it will return approximately 22% (excluding dividends, fees and charges – negative figures indicate an expected loss).