Star shares extend losses as Morningstar slashes valuation
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More news: Star Entertainment shares tanked for the second successive session after Morningstar cut its valuation on the casino operator by 60%, warning that the company "would be lucky to make it to its interim results" next month at its current cash burn trajectory.
Star shares were down 15.4% to 11 cents by 10:50am, having dived 33.3% on Thursday.
Morningstar slashes Star valuation after cash position warning
The news: Morningstar cut its valuation on Star Entertainment by 60% after the embattled casino operator warned on Thursday of a challenging cash position amid continuing difficult trading conditions.
The numbers: Morningstar slashed its valuation on the gambling group by 60% to 20 cents per share.
Star shares plunged 33.3% to 13 cents on Thursday, after the company said that it only had $79 million in available cash at December-end, a reduction of around $107 million from the previous quarter after adjusting for new debt.
Morningstar now sees a 50% probability that the company falls into administration, and equity holders wiped out.
The context: Morningstar analyst Angus Hewitt said Star "would be lucky to make it to its interim results" on 28 February without a lifeline. He noted that weak operating conditions, mandatory card play and poor consumer sentiment are weighing on its top line, while compliance and legal costs have also increased.
What they said: "We still expect a medium-term recovery in operating conditions for casinos," said Hewitt.
"However, Star needs a more immediate solution, and we believe it is unlikely it can trade itself out of this predicament."
The source: Morningstar research
