How did the casino and gambling stocks TAH, SGR, RDC perform in FY2021?

Highlights

  • Australia’s casino and gambling industry was among the hardest hit by COVID-19.
  • While the pandemic-led restrictions significantly impacted the industry’s performance last year, notable improvement has been witnessed this year with the easing of restrictions.
  • Tabcorp Holdings, The Star Entertainment Group and Redcape Hotel are a few gambling stocks that recently released their FY21 results.

One of the hardest-hit industries due to the COVID-19 pandemic, Australia’s casino and gambling industry seems to have recovered partially with notable improvement seen this year as the pandemic-led restrictions each. While still below the all-time high numbers, companies within the space have fared well, reporting significant improvement in their top line figures.

This article would focus on three players from the gambling space that have recently posted their financial results - Tabcorp Holdings, The Star Entertainment Group and Redcape Hotel.

Tabcorp Holdings Limited (ASX:TAH)

Tabcorp Holdings provides gambling and other entertainment services. The Company has three business units - Lotteries and Keno, Wagering and Media, and Gaming Services.

On 18 August 2021, the Company released its FY2021 results, marked by strong operational performance and double-digit earnings growth. Key highlights from the period include:

  • Group revenue increased by 8.8% and EBITDA by 11.3% compared to the prior corresponding period.

  • Tabcorp declared FY2021 dividend of 14.5 cents, up 31.8% compared to the previous corresponding period.
  • The Lotteries & Keno business unit generated record profit despite below-average jackpots, witnessing a digital turnover growth of 30%.
  • In Wagering & Media, the Company noted improved performance and growth across TAB, Media and International. Digital wagering turnover increased by 27%, with solid performance seen in retail venues after the government lifted the lockdown restrictions.
  • Venue restrictions in 1H FY2021 significantly impacted the Gaming services.

The Star Entertainment Group Limited (ASX:SGR)

The Star Entertainment Group Limited operates The Star in Sydney, The Star Gold Coast and Treasury Casino & Hotel in Brisbane. The group also manages the Gold Coast Convention and Exhibition Centre.

On 19 August 2021, SGR released its preliminary final report, highlighting that the Company continued executing its strategy regarding the extraordinary COVID-19-related challenges. Key highlights include:

  • Statutory gross revenue dropped 11% to A$1,557 million.

  • Statutory EBITDA before significant terms increased by 51% to AU$427 million.
  • Statutory EBIT before significant terms was AU$216 million, up 171% compared to the previous corresponding period.
  • Statutory NPAT before significant items improved 458% to AU$109 million.
  • The Board did not declare a final dividend because of the continuing COVID-19 impact on the business.

On 03 August 2021, the Company stated that the lockdown extension in Queensland till 8 August would impact its operations at The Star Gold Coast and the Treasury Casino & Hotel Brisbane.

Redcape Hotel Group (ASX:RDC)

Redcape Hotel Group is amongst the leading community pub operators in Australia. The Company has a portfolio of 36 quality hotels strategically situated across NSW and QLD.

On 18 August 2021, the Company announced its FY2021 results (period ended 30 June 2021). The Company performed significantly well during the period, driven by its focus on community, investing in its leading-edge digital platform to improve customer engagement along with the ongoing commitment to its staff.

The Company believes its focus would position itself well for the long-term once the business returns to normal operating conditions.

FY2021 Highlights

  • Statutory net profit after tax increased by 153.6% to AU$28.5 million.
  • Like-for-like revenue improved by 8.4% from July 2020 to the end of February 2021.
  • Operating EBITDA increased by 29.6% to AU$74.1 million.
  • Underlying Earnings improved by 51.7% to AU$56.4 million.
  • RDC declared a dividend of 8.16 cents per security. It represents a yield of 8.7%.

Other than this, the Company updated that it is putting forward a proposal to delist Redcape so that it can carefully align the realisable value of Redcape Securities with the fundamental value of the business. The Company feels that since it got listed on ASX, it continued to trade at a discount to Directors NAV despite constant growth in earnings and distribution.

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