Star Entertainment Share Price Drop 5.76%
Star Entertainment saw its share price plummet by almost 6% following new COVID-19 restrictions. The share price started at $3.82 but fell as low as $3.60, a 5.759% decrease.
The casino giant announced it is reimposing capacity limits at its Sydney property with immediate effect. A short statement to the Australian Securities Exchange (ASX) detailed plans to introduce a capacity limit.
It is reverting to a one person per four square-meters rule and capping capacity at 300 patrons. Star imposed a one person per two square-meters rule previously.
“The Star Entertainment Group Limited references the NSW Government’s announcement of 20 December 2020 in relation to COVID-19 related restrictions that apply to greater Sydney in the light of the growing COVID-19 cluster on the northern beaches. These restrictions will impact The Star Sydney property.”
“From Monday 21 December 2020, the property will revert to operating with the 1 person per four square-meters rule (previously 1 person per two square-meters) and the 300 patron cap per area will be reinstated. There will be seven zones across the casino area, including three zones on the main gaming floor.”
“The Star remains committed to the health, safety, and wellbeing of its team members and guests.”
Share Price Falls As New Restrictions Imposed
Investors dumped Star Entertainment stock and the sell-off saw the share price fall. Star’s management team had no choice in the matter because the NSW government stepped in with new COVID-19 rules.
A cluster of COVID-19 cases in Sydney’s northern beaches is spreading across the city. Northern beaches is already locked down but new cases grew by 15 to 83 total cases despite this.
Queensland premier Annastcia Palaszczuk is coming down hard in an attempt to stem the growing case. She ordered the erection of concrete barriers at major border crossings, creating a hard border with NSW.
Restrictions remain in place until at least January 8, 2021, 28-days after the cluster’s first case.
Palaszczuk revealed Queensland authorities catching almost 200 people trying to enter the state illegally is the reason for the hard borders.
Gladys Berejiklian is the NSW premier. She will make a decision on additional NSW lockdown measures on Wednesday. Almost unbelievably, Berejiklian refuses to make wearing face masks compulsory despite growing cases.
Sydney Restrictions hurtful to Star Entertainment
Star Sydney is Star Entertainment’s flagship property, one generating 70% of its earnings. It’s easy to see why the share price fell so much.
The company spent almost $500 million improving its Sydney facilities as it prepares to compete with Crown Resorts. Crown Sydney is due to open in February 2021 and ends Star’s exclusivity in Sydney.
The Star Sydney licence doesn’t expire until 2093 and it kept its electronic gaming machine exclusivity until then. This means Crown Sydney cannot operate EGMs for another 73 years, if it opens at all.
Star operates exclusively in Queensland and strengthened that position with a $2.6 billion joint venture in Brisbane.
It isn’t only the share price of Star that is in poor shape. The share price is 21% lower on a year-to-date basis but others are struggling too.
Crown Resorts’ share price is down almost 20% as the gambling industry continues to struggle during these testing times.
Yet More negativity For Star
It has been a testing time for Star during the past 12-months. COVID-19 related closures resulted in a $94.6 million loss. The company’s share price dropped like a stone after that news.
Investors reacted angrily at the recent Annual General Meeting (AGM). They demanded to know why board members received $1.4 million in bonuses. Those bonuses happened despite Star receiving $64.8 million from the JobKeeper rescue package.
Board members defended their decision and the decision to scrap the latest dividend for shareholders.