Place my bets, Star Entertainment Group Ltd - ASX: SGR

Bad news for SGR now are listed below. It is worth nothing that the bad news is most likely priced in the stock price already.

1. intense regulatory scrutiny and hundreds of millions of dollars in penalties for breaching anti-money laundering and counterterrorism financing laws; A fine levied by financial crimes watchdog AUSTRAC, four class actions and two revoked state casino licences weighed on the company in the last financial year, culminating in a $2.2 billion non-cash impairment.
2. The opening of Crown Resorts’ gaming floor in Sydney has created competition for its flagship casino, while there have been lengthy delays in a major construction project at Queen’s Wharf in Brisbane. Star has estimated Queen’s Wharf’s project costs would be $2.9 billion. It has been in a dispute with the builder, Multiplex, which has delayed construction.
3. The company has also secured $450 million in new debt facilities from Barclays and Westpac as part of a refinancing process.
4. Cash flow shortage, so right issue equity raising was implemented.
5. Overall, pessimism all over the business, revenue recovery and future profitability are in serious doubt.

I personally see potential buying opportunities at this level, as quality companies with tested business models that generate stable earnings are in general more likely to survive short term strains and eventually turnaround in the long run. FMG shares fell from $6.72 to $1.73 from around 2011 to 2016 owing to cash flow, high leverage and exports issues. In the long run, it had a great run from $1.73 dollar to $23 dollars. Similarly, Qantas once faced lots of issues back in 2012 (when share price fell to $1.12 low in July 12) including heightened domestic competitions, rising oil prices and cash flow problems. Over the years, the resilient business generated great returns for shareholders, shares rose from $1.12 in July 2012 to $6.50 in April 2023.

The similar position SGR is in its business and economic cycles could mean potential upside for SGR shareholders over the long run.