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Bought Crown resorts on Charlie’s recommendation at $15.43. It’s down to $12.79 today, 17 June. Happy to hold if they are likely to rebound in the not too distant future, but don’t want to be stuck with them for an extended period waiting for recovery. What would you advise?
A: Thanks for the question.
I think if you are looking for an early rebound in price, you are likely to be disappointed. At the moment, Crown is being caught up in the wash over the crackdown by the Chinese authorities on corruption and its impact on gambling revenues in Macau.
While I look at Crown as an Australian company with great assets in Australia and with some exposure to Macau through its one-third owned entity Melco Crown, the market is placing considerable emphasis on the Macau exposure. The Brokers are marginally positive. According to FN Arena, the consensus target price is $15.23 and sentiment is +0.3 (scale -1.0 is most negative, to +1.0 most positive).
Long term – I think Crown is good value and I would hold. Short term – unlikely to see any bounce until Macau gambling revenues start to stabilise.
