Crown Casino: Strategic Viewpoint, page-7

Crown has exited its Melco and Las Vagus expansion plans, and focused on growing its domestic market opportunities (mainly its $2.2b Crown Sydney Casino).

For Australian investors this has two benefits:
a) Australian companies have a poor track record of international expansion except where they have a unique offering (think CSL). Most international expansions have ended up being wealth destruction exercises for shareholders.
b) Profits will be sourced and taxed in Australia, and therefore in the longer term, Crown will go back to paying fully franked dividends.

A quick review of the balance sheet and forecast balance sheet, shows:
a) The historical cash on the balance sheet from the exit of Melco, Las Vagus and the sale of the online gambling platform Crown Bet has mostly been allocated to building Crown Sydney. ie There has not been a significant increase in longterm debt to build Crown Sydney. Once completed Crown will have a $2.2b hard asset generating future profit.

b) Operating cash flow should receive a very nice boost after 2021, however profit will look 'constrained' by the D&A from Crown Sydney. The D&A will wash through in subsequent years, however the focus should be on operating cash flow (ie investors looking at just the net profit figure might be disappointed, but remember accounting profit and business economic profit are not the same, these are long term assets and the future cash flow will be greater than the replacement D&A).

Crown Sydney is marketed as "VIP" when in actuality its "Mass Influential Market". The table minimum spends are not very high, $20 for most table games, $30 for baccarat. With the impressive build and Crown Quality, expect Crown Sydney to be very very popular with the local Sydney community.