Wednesday, February 22, 2012

Reef keeps rolling

Reports from Reef Casino Trust (RCT) usually provide something of interest and the latest annual result continues recent momentum despite a difficult trading period:
Trust distributable profit* was $11.6 million for the year ended 31 December 2011. This compares with $7.7 million in 2010 or 52.0% higher. Total Trust revenue (comprising mainly of rental income from the Reef Hotel Casino) was $22.0 million,21.8% higher than 2010. This increase is due to good growth in revenues across casino and hotel operations at the Reef Hotel Casino. In addition, a better than “theoretical” win rate on premium casino
play assisted in generating revenues growth.
Casino visitations were actually down 3% attributed to impact of the natural disasters in the first half of the year. The reference to premium player win rate is interesting as subsequent commentary refers to focus on nearby markets. RCT has previously commented on PNG as a source of premium players. I wonder if that win rate will continue if more gambling savvy Chinese premium players start rolling through the doors?

Again, RCT have reaffirmed a China focussed strategy albeit seeing direct flights still a couple of years away. Cafe China also gets a mention for contribution to profitability. The relevance of the Casino as a regional tourism asset increases with Chinese tourism.

The downside, an independent valuation reduced the value from $143 million at June 30 2009, down to $125 million at December 31 2011. However, I dont think that would really be unexpected?

Disclaimier: I have no financial interest in Reef Casino and don't gamble at all myself.


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