Today, on July 21st 2015, it was reported that the shares of Echo Entertainment Group Ltd. grew to a new record and they were able to fight off the competition of Crown Resorts Ltd.
The stock grew to AUD$5.01, which is an extra 3.5%. This is the highest it has been since a June 2011 public offering and it shows a 32% gain this year.
According to the Deutsche Bank AG, the selection of the Destination Brisbane group that includes Far East and Chow Tai Fook will protect the business of Echo as it amounts to 19% of earnings.
There has been a rise for spending in Australia’s casinos and they are able to take on another three new major resorts over the next five years. Matt Bekier, the Echo Chief Executive Officer said that the Brisbane resort will be an asset and will be able to compete with offerings in Macau.
The resort will be in the shape of a C that features an observation deck that has a glass floor, a river footbridge and a roof top garden that will overlook the Brisbane River. The former treasury building that contains an Echo casino will be transformed into a Ritz Carlton Hotel Co. site and a department store.
It has been estimated by Mark Wilson a Deutsche Bank analyst that the development will cost around AUD$1.5 billion and Echo expect to fund the project through new and current debt facilities as well as through cash flow, which is generated by the business.
Echo will have 50% of the group and 50% will go to Far East and Chow Tai Fook equally. These three will all contribute based on their stakes in order to develop the resort. Chow Tai Fook and Far East will be paying for residential and other such developments equally.
It has also been said that Echo will receive a fee for the operating of the resort and their partners will receive fees for any VIP business that they directly refer to the casino.
Echo has a battle with Crown, which broke the monopoly that Echo had in Sydney two years ago. Crown won the right to develop a new casino, which is to be developed on the Sydney harbor shore that is opposite Echo’s Star Site.
The net income of Echo will have almost doubled from year end last year and amounts to AUD$201 million.
Over the 12 months that ended on June 30th, the stock of Echo was 42% and Crown saw a 17% decrease.