BRISBANE LOOMS AS NEXT CASINO BATTLEGROUND
Written on the 5 July 2013 by James Perkins
BRISBANE looms as a key battleground in the casino war between Echo Entertainment Group (ASX:EGP) and Crown Limited (ASX:CWN) says Morningstar equities analyst Michael Wu.
CWN was given the go ahead for its billion-dollar high-rise casino development at Barangaroo South on the Sydney Harbour to move to the next stage in the NSW government’s approval process, at the expense of a disappointed rival EGP proposal.
CWN owner James Packer quickly got on the front foot this morning, saying he is committed to a move into the state and claiming Echo had under invested in its Queensland venues.
Wu expects Echo to move quickly on its Brisbane plans, which includes the billion-dollar proposal for the redevelopment of Treasury Casino, incorporating the adjacent George Street government offices.
“After what happened yesterday, from Echo’s perspective, they will put a greater focus on the Queensland portfolio, given they have spent one billion dollars at The Star over the past few years,” says Wu.
“Echo has spoken to the (Queensland) government and is keen to expand to the next phase of investment.”
Wu says it is too early to predict what will happen in Brisbane.
“There is an obvious interest there (from Crown) and there is interest from offshore players as well, who are having a look at some potential sites.”
EGP operates the Treasury and Gold Coast’s Jupiters Hotel and Casino as a package and any upgrade will be complimentary.
“Echo is looking to expand both properties at the same time. They flagged what they have called Project Icon, before recent management changes, and it seems like that will proceed,” says Wu.
“It won’t be exactly what they did before with Icon, it seems like they are aiming for something bigger than what was proposed in the past. “
Wu believes there will be short term pressure on the EGP share price.
“They do still have six years of exclusivity on the Sydney property and they do have a strategy to respond to a new entrant in the market in terms of The Star, but short-term wise, the pressure is on.”
Echo was trading down 4.64 per cent this afternoon at $2.77 per unit, while CWN jumped 3.4 per cent on the previous day’s close at $12.62.
An EGP representative has not returned calls from Brisbane Business News.