Star Entertainment: Compliance Costs to Continue
We lower our fair value estimate for shares in no-moat Star Entertainment by 4% to AUD 0.86 following a trading update. Main-floor gaming is holding up across all venues, up about 5% in aggregate. But it’s not enough to offset further deterioration in private gaming rooms—particularly in Queensland. Star called out economic conditions in general, and cost-of-living pressures in particular. We expect the strong main floor gaming result reflects an element of “trading down” from private rooms to main floor. Fiscal 2024 revenue overall is shaping up to be about 10% below fiscal 2023 and about one third lower than pre-covid levels.