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China worries cloud Star revenue outlook

AAP logoAAP 27/10/2016 Lilly Vitorovich

The head of casino operator Star Entertainment says the recent detention of 18 staff of rival Crown Resorts in China has caused some uncertainty and cast doubt over future revenue.

"The situation in China has, understandably created some uncertainty and potential impact on revenue is not clear at this point given the limited information available," chief executive Matt Bekier told shareholders at Star's annual general meeting on Friday.

Australia is a popular destination for Chinese travellers, but given China's anti-corruption drive there are fears it could damage international business for local casino operators.

Star chairman John O'Neill said VIP business delivers less than 30 per cent of the group's gross revenue and 16 per cent of earnings before interest, tax, deprecisation and amortisation. Around 80 per cent of gross revenue comes from from junkets out of Asia.

Mr O'Neill said none of the group's employees have been detained or questioned in China, that the group has no offices in mainland China and that it operates within the rules and regulations set by Chinese authorities.

"These are early days in terms of the situation in China. We will continue to monitor developments closely, while working with staff and Asian-based external agents to understand the situation more fully as it unfolds," Mr O'Neill said in a speech to the AGM.

Star on Friday reported mixed revenue numbers for the period of July 1 to October 22, with group revenue up 12.8 per cent from a year earlier.

Normalised group revenue - which excludes significant items and variations in the theoretical win rate against gamblers - fell two per cent, while domestic revenue was flat due to an unusually low win rate in private gaming room table games.

"Disruption from the development work in the Gold Coast and Sydeny has also impacted visitation numbers and customer spend negatively," Mr Bekier said.

However, the disruption was expected to reduce and not have any material impact in the second-half of the financial year, he said.

Star's international business is showing "satisfactory" volumes and an unusually strong win rate in the year to date.

Star share were down 7.5 cents, or 1.5 per cent ,at 4.805 at 1139 AEDT in a flat Australian share market.

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