Author: therawinformant

With interest rates at record lows and unlikely to go higher for some time, it is increasingly difficult for income investors to earn a sufficient income from traditional interest-bearing assets.

Fortunately, the Australian share market is here to save the day with a large number of dividend shares offering far more generous yields.

Two ASX dividend shares to buy are listed below:

Fortescue Metals Group Limited (ASX: FMG)

Fortescue is a leading iron ore producer with world class and ultra-low cost operations. Combined with its improving grades and sky high iron ore prices, Fortescue is generating significant free cash flows at present. And with the outlook for steel production in China improving and market conditions remaining relatively tight, experts are tipping iron ore prices to average above ~US$100 a tonne in 2021. This compares to Fortescue’s current C1 costs of US$12.74 per wet metric tonne.

One broker that is confident on its prospects is Macquarie. It notes that strong iron ore prices are currently providing a free cash flow yield of ~17%. In light of this, the broker is forecasting a bumper dividend payment in FY 2021 of approximately $1.64 per share fully franked. Based on the current Fortescue share price, this equates to a massive 9.7% dividend yield. Macquarie has an outperform rating and $20.00 price target on its shares.

Telstra Corporation Ltd (ASX: TLS)

With its T22 strategy delivering on its objectives, the NBN headwind easing, and 5G internet taking off, this telco giant’s outlook has improved greatly in recent months. In addition to this, the company’s plan to split into three separate entities has been well received by the market and is expected to create value for shareholders.

The latter plan has gone down particularly well with analysts at Credit Suisse, who believe it reinforces its view around the underlying value of its assets. The broker also believes Telstra is well-placed to maintain its 16 cents per share dividend for the foreseeable future. Based on the current Telstra share price, this means a fully franked 5.3% dividend yield. Credit Suisse has an outperform rating and $3.85 price target on its shares.

More reading

• Why the Telstra (ASX:TLS) share price can go even higher from here
• 2 ASX dividend shares to buy today for income
• Macquarie (ASX:MQG) picks best ASX stocks to buy for 2021 post-COVID recovery
• Aussie companies blast ‘knee-jerk’ COVID-19 border closures
• ASX 200 Weekly Wrap: ASX continues to hit post-COVID highs

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Wednesday the S&P/ASX 200 Index (ASX: XJO) continued its positive run and charged higher again. The benchmark index rose 0.5% to 6,531.1 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 poised to rise gain.

The Australian share market looks set to continue its positive run despite a weak night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to rise 27 points or 0.4% at the open. In late trade on Wall Street, the Dow Jones is down 0.15%, the S&P 500 has fallen 0.3%, and the Nasdaq is down 0.15%.

Crown told to delay Crown Sydney opening.

The Crown Resorts Ltd (ASX: CWN) share price will be one to watch this morning when it returns from its trading halt. The casino and resorts operator has been told by the New South Wales Independent Liquor and Gaming Authority (ILGA) to delay the opening of Crown Sydney. The gambling regulator has concerns over money laundering and will decide whether it is fit and proper to run the casino in February. Crown Sydney was due to open next month.

Oil prices rise.

It could be a good day for energy shares such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) after oil prices pushed higher. According to Bloomberg, the WTI crude oil price is up 1.6% to US$42.09 a barrel and the Brent crude oil price is up 2% to US$44.61 a barrel. Oil prices were given a boost by news that Pfizer has revised the effectiveness of its COVID-19 vaccine to 95%.

Annual general meetings.

A number of companies are holding their annual general meetings on Thursday and could provide updates at their events. This includes the likes of electronic design software provider Altium Limited (ASX: ALU) and job listings giant SEEK Limited (ASX: SEK).

Gold price lower.

Gold miners including Newcrest Mining Limited (ASX: NCM) and Saracen Mineral Holdings Limited (ASX: SAR) could come under pressure today after the Pfizer COVID vaccine news weighed on the safe haven asset. According to CNBC, the spot gold price is down 0.75% to US$1,871.30 an ounce.

More reading

• ASX 200 rises again on Wednesday
• Crown (ASX:CWN) share price on watch after being told to delay Crown Sydney opening
• 2 ASX shares making all-time highs today
• ASX stock of the day: Redbubble (ASX:RBL) shares up 5% today
• Why ASX tech shares should fly long after this crisis is over

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia has recommended Crown Resorts Limited and SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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CSL Limited (ASX: CSL), which was previously known as the Commonwealth Serum Laboratories, was founded back in 1916 has gone on to become one of the world’s leading specialty biotechnology companies.

It is now made up of two businesses – CSL Behring and Seqirus.

CSL Behring is the biotherapeutics side of the business focused on developing life-saving products from human blood plasma. Among its leading products you’ll find the likes of Haegarda, Hizentra, and Privigen.

Whereas Seqirus is the company’s vaccine business, which has really come to prominence this year because of the COVID-19 pandemic. It recently announced plans to invest ~$800 million in the construction of an influenza vaccine manufacturing facility in Melbourne.

This follows the announcement of a major deal with the Federal Government for the supply of a range of life-saving treatments for over 10 years. This includes anti-venoms for Australian snakes, spiders and marine creatures, and influenza pandemic protection.

Research and development.

One of the keys to the company’s success over the years has been its investment in research and development (R&D).

Every year CSL invests in the region of 10% to 12% of its sales revenue back into its R&D activities. This means almost US$1 billion was invested in these activities in FY 2020.

This has helped ensure that CSL is at the forefront of innovation in the industry and has led to it developing a wide portfolio of therapies and vaccines generating billions of dollars of sales each year.

Pleasingly, the company’s investments in recent years means that it has a burgeoning R&D pipeline, positioning it perfectly for growth.

Is the CSL share price in the buy zone?

It is partly because of this pipeline that one leading broker is recommending CSL as a buy right now.

Following its R&D briefing last month, UBS put a buy rating and $346.00 price target on its shares.

It notes that product development has been a key driver of growth over the last few years and appears confident that this will be the case in the future. Particularly given its opportunities in antibodies, gene therapies, and COVID-19.

More reading

• Top brokers name 3 ASX shares to buy today
• ASX ends trading early, ASX 200 up 1.2%
• Why the CSL (ASX: CSL) share price is climbing higher today
• ASX 200 up 1.2%: Afterpay ASIC response, Elders result, CSL vaccine facility
• ASX 200 Weekly Wrap: ASX continues to hit post-COVID highs

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The legendary investor Warren Buffett – chair and CEO of Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) – is famous for his coinage of the term ‘moat’.

He explained his criteria for a moat as follows in his 2007 annual letter to the shareholders of Berkshire Hathaway:

It’s better to have a part interest in the Hope Diamond than to own all of a rhinestone. A truly great business must have an enduring ‘moat‘ that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business ‘castle’ that is earning high returns.

Therefore a formidable barrier such as a company’s being the low-cost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with ‘roman candles’, companies whose moats proved illusory and were soon crossed.

Now, not to disparage the talents of any readers out there, but Buffett is an investor of the ‘one-of-a-kind’ variety. It’s easy to sit there and come up with a list of businesses that you might see as possessing such a moat. It’s harder though to come up with an annual return in one’s share portfolio exceeding 20% per annum for decades on end (as Buffett has done).

Thus, one option to consider in Buffett’s stead today is the VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT).

MOATs all round

MOAT is an exchange-traded fund (ETF) that sits on our own ASX. However, it is an ETF that only invests in US shares. Not just any US shares though. MOAT tracks an index constructed by Morningstar, which holds only shares that it sees as possessing the kind of competitive advantages that Buffett describes above.

In determining the presence of a ‘moat’, Morningstar considers 5 sources of sustainable competitive advantage: intangible assets (for example, brands or intellectual property), switching costs, network effect, cost advantage and efficient scale.

At the present time, MOAT holds 48 stocks and charges a management fee of 0.49% per annum. Amongst this ETF’s current portfolio are companies like Tiffany & Co (NYSE: TIF), Microsoft Corporation (NASDAQ: MSFT), Amazon.com Inc (NASDAQ: AMZN), Kellogg Company (NYSE: K), Harley Davidson Inc (NYSE: HOG),  American Express Co (NYSE: AXP), and Coca-Cola Co (NYSE: KO). You might recognise those last 2 companies from the names Buffett lists above.

All of these companies evidently fit into Morningstar’s definition of having a moat, for various reasons. Think about the brands that companies like Kellogg, Harley Davidson and Tiffany have. Or the costs of switching away from Microsoft’s Windows and Office products. Or the scale of Amazon.

MOAT is currently rated as a ‘buy’ by the Motley Fool’s flagship Share Advisor service. Scott Phillips and the Share Advisor team like MOAT’s international exposure, the diversification it brings to the table, as well as the “exposure to Buffettesque businesses at a good price”.

More reading

• Here are the stocks Warren Buffett has been buying and selling
• Warren Buffett bought 4 pharma giants in Q3
• What has Warren Buffett been up to lately?
• 2 leading ETFs to buy for global returns
• Don’t listen to me. Listen to Charlie Munger…

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of American Express, Kellogg, Coca-Cola, and Procter & Gamble. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Berkshire Hathaway (B shares), and Microsoft and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and short December 2020 $210 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Amazon and Berkshire Hathaway (B shares). We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) went up again today. It rose by 0.5% to 6,531 points.

South Australia goes into lockdown

The South Australian government has announced heavy lockdowns as of midnight tonight for six days to try to get the COVID-19 outbreak under control.

People are restricted from leaving the house for six days, apart from access essential services. South Australians won’t be allowed to leave the home for exercise. Masks will be required in all areas outside the home.

All takeaway food, pubs, cafes restaurants and so on will be shut. Universities will be closed. All schools will be closed except for children of essential workers and vulnerable children. One person per household will be allowed to go grocery shopping once a day.

Many other businesses will be closed during this period including real estate open inspections, construction, weddings, funerals and FIFO work.

However, many essential services will remain open including critical infrastructure (water, power and telecommunications), supermarkets, medical services, public transport, the airport, freight services, petrol stations, certain mining, smelting and large factories, childcare for essential workers, veterinary surgeons and agriculture.

Crown Resorts Ltd (ASX: CWN)

Earlier today, according to reporting by the Australian Financial Review, the major casino business has admitted to a NSW inquiry that it is more probable than not that criminals laundered money through two of its shell bank accounts.

It’s reported that independent reviews had found that cuckoo smurfing had likely occurred in the company’s accounts, which were set up to handle debts owed by VIP gamblers. Cuckoo smurfing is a type of money laundering where innocent parties make and receive legitimate payments but illicit funds are inserted into the process.

Crown Resorts shares then went into a trading halt. The NSW gaming regulator decided to wait until the inquiry into Crown gives its final report in February before allowing gambling at the site. 

The Crown share price was down 0.6% before the trading halt. 

Aristocrat Leisure Limited (ASX: ALL)

The gambling machine and digital gaming business announced its FY20 result today.

The ASX 200 company reported that its revenue declined by 5.9% to $4.14 billion. Normalised earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 31.8%, normalised net profit after tax dropped 52.6% to $357.1 million and normalised earnings per share (EPS) went down by 52.5% to 74.7 cents.

Reported net profit after tax, which includes the recognition of a deferred tax asset worth approximately $1.1 billion, increased 97.2% to $1.38 billion. Operating cash flow decreased by 5.8% to $1.02 billion.

Aristocrat’s total dividend per share was cut by 82.1% to 10 cents per share. However, its closing net debt position improved by 29.5% to $1.57 billion.

The Aristocrat share price rose around 4% today.

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price dropped by around 5% today after the business held its annual general meeting (AGM).

The ASX 200 business is maintaining its guidance for the FY21 half year and full year results. It’s still expecting total revenue for the first half of FY21 to be between NZ$725 million to NZ$775 million. FY21 total revenue is expected to be between NZ$1.8 billion to NZ$1.9 billion. The FY21 EBITDA margin is expected to be in the order of 31%.

A2 Milk said that due to the volatility arising from COVID-19 and the difficulties this presents with forecasting, there is uncertainty to this forecast.

The business said that this outlook includes a significant increase in revenue in the second half, which is dependent on a number of key assumptions, including an improvement in the daigou channel and continued growth of the China label business.

But A2 Milk commented that it has observed strong underlying brand health metrics, in particular in China, including market share expansion, and growth of brand awareness and loyalty measures. A2 Milk said that this gives management confidence that, notwithstanding the current headwinds, the fundamentals of the business over the medium term remain sound.

More reading

• Crown (ASX:CWN) share price on watch after being told to delay Crown Sydney opening
• 2 ASX shares making all-time highs today
• ASX stock of the day: Redbubble (ASX:RBL) shares up 5% today
• Why ASX tech shares should fly long after this crisis is over
• Morgan Stanley updates its share price targets for the big 4 banks

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended Crown Resorts Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Dexus Property Group (ASX: DXS) share price rose marginally higher today after the company announced the sale of its Grosvenor Place in Sydney. Dexus shares closed the day up 0.31% at $9.85 per share.

What did Dexus announce today?

Dexus advised that it has conditionally exchanged contracts to sell a 50% stake in Grosvenor Place, Sydney. Its 50% claim in the building comprises a split ownership by Dexus and Dexus Office Partnership, which Dexus also holds a 50% interest in.

Grosvenor Place is a 44-level office tower that contains a ground floor retail, built in 1988. The property has a leasehold with 78 years remaining. At the end of the financial year, occupancy rates were recorded at 89% with a weighted average lease expiry of 3.4 years. Dexus acquired an initial interest in Grosvenor Place in 2013, generating an annual return of 12%.

The sale of the office building will realise total net proceeds of $925 million for the entire 50% interest. However, due to current vacancy and the short-term leasing risk in the building, Dexus received $694 million. This represents a 5% discount on the property’s book value as at 30 June.

Dexus highlighted that the transaction was finalised following an on-market campaign, in which over $803 million in sales were conducted. The purchaser of the building is an existing co-owner. Settlement will conclude early next year, pending approval from the foreign investment review board.

The company advised that the net proceeds of the sale will be used to repay its debt. 

What did management say?

Dexus chief investment officer Mr Ross Du Vernet commented on the sale:

This transaction continues our asset recycling strategy, realising value for both Dexus and our Dexus Office Partner.

The sale further strengthens our balance sheet and enables us to organically fund higher return growth initiatives in our funds and development businesses. It also provides improved capacity to undertake capital management initiatives should there be a continued disconnect between public and private markets.

About the Dexus share price

The Dexus share price has fallen from grace since COVID-19 hit the Australia property sector. Shares in the group plummeted from the $13.51 reached in February to as low as $8.03 in the aftermath.

Dexus has a current market capitalisation of $10.7 billion and a price-to-earnings (P/E) ratio of 11.1.

More reading

• 3 ASX dividend shares rated as buys by brokers
• Why REITs led the pack on the ASX today
• ASX property shares buoyed by latest market data
• Investors rejoice as AMP (ASX:AMP) share price rockets 20% on takeover
• These beaten-up shares are about to pick up: Moody’s

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Australian Financial Review hosted its annual Banking and Wealth Summit today, which brings together a forum of banking and wealth leaders, regulators, and policymakers to debate the future of Australia’s financial services. Today’s summit was hosted digitally. 

Here are some takeaway highlights.

Buy now, pay later industry ‘a potential threat’

Commonwealth Bank of Australia (ASX: CBA) chief executive Matt Comyn says that the buy now, pay later (BNPL) industry, especially its leading player Afterpay Ltd (ASX: APT), is a potential threat to the banking sector over time. The comment comes after data released on Monday showed that the BNPL sector had almost doubled in just two years. The data showed that transaction numbers using the BNPL platform had spiked by 90%, rising from 16.8 million in 2017-18 to 32 million today. 

However, Mr Comyn insists that instalment payments made to a BNPL providers should be treated as credit – and that the whole sector should be subject to the same set of regulations imposed to other credit lenders, including the CBA. 

“When you open a buy now, pay later account and it said you are approved for $1000, that sounds like credit to me … We believe that regulation is inevitable but not imminent,” he says.

Pandemic has permanently changed working arrangements

The coronavirus pandemic has permanently changed the way bank employees work, according to CBA and National Australia Bank Ltd (ASX: NAB). CBA’s Comyn says that the pandemic has accelerated workplace flexibility, but still expects customer-facing employees to return to the office in the near future.

NAB chief executive Ross McEwan echoes this sentiment and says that 80% of its staff have signalled they want a more flexible working arrangement going forward. Mr McEwan says, “They’ve proved they can do the job brilliantly from home… and I think we can find that balance so that it’s actually a win-win for everyone.”

NAB says economy is bouncing back fast, but warns on property market

NAB’s McEwan says that news of the vaccines have brought more certainty to the markets, and believes that Australia is on the road to recovery:  “We’re now expecting the economy to get back to pre-COVID levels by late 2021, much earlier than we originally thought.” 

However Mr McEwan was less optimistic about the state of the apartment market in city centres, saying that the outer suburb properties will outperform as people move further away from crowded areas.  

During the summit, NAB has communicated via its Twitter account that all of its branches have been closed due to a physical security threat.

ASIC to be tougher on enforcement as it files criminal charges

Corporate regulator Australian Securities and Investment Commission (ASIC) says that it’s “getting on with it” after being given powers by parliament that will put the onus on industry to self regulate.

The comment came after Treasurer Josh Frydenberg told ASIC to steer away from policy making and focus on enforcement, saying “stop sending psychologists into boardrooms”. In response, ASIC says that it’s currently pursuing two dozen criminal charges on individuals and companies. Of the 13 royal commission referrals made to ASIC to pursue, just two remain under investigation.

APRA to change bank capital rules

The Australian Prudential and Regulations Authority (APRA) chairman Wayne Byres says that it will make some changes to the way capital is calculated, without changing the ultimate level of capital that banks need to hold. “Probably the most fundamental change from the proposals is that bank capital adequacy ratios will change, specifically they will tend to be higher,” Mr Byres says.

Treasurer Frydenberg slams regulators

Mr Frydenberg opened the summit this morning by reprimanding regulators for “over-zealous activity that has crippled lending”. The treasurer says the government wants to move away from ‘lender beware’ regulations to one where blame is not placed fully on banks when a loan goes sour. This, he says, will allow credit to flow to consumers more easily.

Mr Frydenberg says:

We want to cut red tape. But this is not about trying to help the banks – the banks are not my constituency. This is about helping consumers. I am seeking from regulators that they are not making policy, that they are not overreaching. I want to see them enforce the law, that would be better time spent than sending psychologists into the board room quite frankly.

The treasurer was optimistic, saying that Australian consumer confidence was up for the 11th straight week, the Australian dollar is back to where it was pre-COVID, and there has been no run on banks during the pandemic. 

More reading

• Morgan Stanley updates its share price targets for the big 4 banks
• Afterpay (ASX:APT) share price under pressure by US BNPL giant
• ASX 200 up 0.35%: Aristocrat FY 2020 results, big four banks higher, a2 Milk update
• Here’s the ASX bank share rated as a conviction buy
• Here are the US shares that CommSec customers are buying

Motley Fool contributor Eddy Sunarto owns shares of Commonwealth Bank of Australia. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The SKYCITY Entertainment Group Limited (ASX: SKC) share price was out of form on Wednesday and dropped lower.

The casino and resorts operator’s shares ended the day 0.35% lower at $2.88.

This compares to a 0.5% gain by the the S&P/ASX 200 Index (ASX: XJO).

Why did SKYCITY share price drop lower?

The SKYCITY share price came under pressure on Wednesday after it announced that it would be forced to close its Adelaide-based casino and entertainment facilities from midnight tonight.

This follows an announcement by the South Australian government earlier today that revealed a range of new state-wide COVID-19 restrictions that are being implemented to prevent the spread of the virus following a recent outbreak.

As things stand, SKYCITY is expected to close its Adelaide operation for six days until midnight on 24 November.

In light of this, the company advised that the opening of its new $330 million expansion development, which includes a 120-room luxury hotel, will now be delayed until further notice.

Positively, the company’s New Zealand operations are unaffected and remain open at Alert Level 1.

What else is happening?

SKYCITY isn’t the only casino and resorts operator that is being forced to delay the opening of new facilities.

This afternoon the New South Wales Independent Liquor and Gaming Authority (ILGA) revealed that it will prevent Crown Resorts Ltd (ASX: CWN) from opening its new Crown Sydney operation in December as previously planned.

This is in response to Crown admitting at an inquiry that it was likely that money laundering had occurred through accounts it set up for its VIP players.

NSW ILGA’s chairman, Philip Crawford, commented: “Because when we talk about money laundering … we’re talking about potential drugs, child sexual exploitation, people trafficking and financing terrorism … you can see why we have concern.”

“In light of this, we did not consider it appropriate to determine the applications before the Authority until the findings of the Bergin Inquiry,” he concluded.

The findings of this inquiry are not expected to be released until February.  

More reading

• Why Aurelia Metals, PolyNovo, SKYCITY, & Tyro shares are dropping lower
• ASX 200 up 1.2%: Afterpay ASIC response, Elders result, CSL vaccine facility

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts Limited and Sky City Entertainment Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Crown Resorts Ltd (ASX: CWN) share price will be on watch tomorrow if it returns from its trading halt.

Why is the Crown share price in a trading halt?

The casino and resorts operator requested a trading halt this afternoon pending the release of a response to a letter received from the New South Wales Independent Liquor and Gaming Authority (ILGA).

This letter is in relation to the long-awaited opening date of Crown Sydney in Barangaroo.

What is happening?

This afternoon the New South Wales ILGA held a press conference which revealed that it will prevent the casino and resorts operator from opening Crown Sydney in December as previously planned.

According to the ABC, the gambling regulator has said that it is “not comfortable” with Crown operating the $2.2 billion development at Barangaroo due to comments at an ongoing inquiry.

At the inquiry, the company admitted that it was likely that money laundering had occurred through accounts it set up for its VIP players.

What now for Crown?

NSW ILGA’s chairman, Philip Crawford, said the regulator was not comfortable with the company operating its gaming operations until it received the findings from the ongoing inquiry.

This could mean a reasonably lengthy and costly delay for the company. Commissioner Patricia Bergin, SC, is looking into Crown’s appropriateness to hold the licence, but her final report is not due to be released until February 2021.

Commenting on the money laundering concerns, Mr Crawford said: “We had no notice that was being done, I don’t think the Bergin inquiry or counsel assisting were aware of it and it’s come at the eleventh hour, literally — apparently 11:00 last night.”

“Because when we talk about money laundering … we’re talking about potential drugs, child sexual exploitation, people trafficking and financing terrorism … you can see why we have concern,” he added.

“In light of this, we did not consider it appropriate to determine the applications before the Authority until the findings of the Bergin Inquiry,” he concluded.

More reading

• ASX 200 jumps 1.75% on Monday
• Crown (ASX:CWN) share price up as Melbourne casino set to reopen
• Crown (ASX:CWN) share price bucked bad news to rise 6% last week
• Crown Resorts (ASX:CWN) share price edges upward after AGM results
• Broker updates are mixed on these 6 high profile ASX 200 shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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