Star Entertainment Group

Star Entertainment Group FY22 results were in line with consensus at the sales line but slightly ahead on EBITDA and NPAT, while staff expenses were up, J.P. Morgan comments on its first take of the earnings posting. 

Leading brokerage J.P. Morgan’s first take on Star Entertainment Group FY22 is that the result is in line with consensus at the sales line, but slightly ahead both on EBITDA, by 5 percent, and NPAT, by 11 percent.

In turn, employee costs were elevated in FY22 relative to FY21, and FY19 as well, the brokerage underlines.

“Early FY23 trading signs are strong, however, cost management is in-focus as both domestic revenues ramp and SYD competition begins,” J.P. Morgan states.

In turn, positively, FY23 CAPEX guidance has been lowered by approximately 14 percent.

Among the key positives in J.P. Morgan’s initial take, FY23 trading to date appears solid with sales, approximately 9 percent above pre- COVID-19 levels for the period 1 July to 18 August. 

Also, FY23 Capex guidance has been lowered by approximately 14 percent to A$150m. 

Furthermore, SGR sees no covenant relief required for FY23 testing dates on current trends.

In turn, the 4Q22 EBITDA annualized outcome is 2 percent below the FY23 consensus;

J.P. Morgan highlights a clear increase in FY22 employee costs as a percentage of revenue while noting that the “1H22 COVID impacts skew this outcome with a slow ramp-up in the PCP driving the increase.” 

The leading brokerage also points out the Table softness across Sydney and Brisbane properties relative to slot strength.

Outlook-wise, J.P. Morgan notes Star’s FY23 has been trading at over 9 percent of pre-COVID levels. However, the brokerage notes that it’s “too early to tell” if Sydney, Gold Coast, and Brisbane are showing signs of strong pre-COVID-level performance.

Overall, J.P. Morgan expects FY23 capex expectations to be reduced as the company has lowered guidance of approximately 14 percent.

The results release is followed by a conference call at 10.00 am.