Better to bet on the house rather than in the house? (ASX: CWN)
What’s the quickest way to make money as a cash poor university student in Sydney?
As a 21 year old, in 3rd year of university, you get the benefit of being exposed to all sorts of people at university. One commonality that seems to ring to me, is seeing lots of university students, going to casinos like The Star (in Sydney), to make a quick buck.
You hear stories of peers, making 10x or more, in returns on their initial investments of $50 in the casinos.
That raised a question for me, which I got the opportunity to ask myself naturally, when I did my FMAA Asset Management Case Competition at UNSW this year with a close friend, during August 2017.
Was it better to bet on the house rather than in the house?
As a Christian, I don’t particularly support Crown Casino’s (ASX: CWN) vision or what they stand for. Don’t get me wrong, I feel like James Packer, has done an excellent job in making donations to the needy in Australia, and providing jobs to the jobless. However, the whole idea of investing in casinos just isn’t for me to stomach, and not worth compromising my Christian values as I feel it would if I held those shares (but each to their own beliefs).
In saying all this however…
Key highlights of my presentation from 05/09/17 data for CWN (see attached for further details below – for informational purposes only)
Ticker symbol: CWN.ASX
Share price: $11.59
Market cap: $8.46B
Net debt: $173.80m
Dividend yield : 5.18%
Net gearing: 38%
P/E ratio (normalised): 24.52
BUY rating – 12m TP of $12.94 (includes 60c promised dividend) in 12 months, so potential upside of 12%
I still encourage readers to take a look through the actual PDF attachment for more details on the fundamental analysis of the industry, thesis for BUY, and valuation for underpricing. If anything, hopefully there is some learning material within those slides.
I also want to thank Kevin Zhang, for putting up with a lot of my queries in our valuation, and going through the struggle of producing a crisp set of slides to the panel of judges in the NSW state finals for a BUY on CWN. It was truly one of the most memorable milestones for me in my UNSW career. Despite all those late nights as a team of 2, I could not have asked for a more reliable and enthusiastic university friend, to do this with.
Please message me if you have any queries about the slides.
