Casino operator Echo Entertainment expects a boost in profits as it prepares to bid for a second Brisbane casino licence.
Casino operator Echo Entertainment has forecast a solid profit rise as it gears up to battle for a second Brisbane casino licence.
Shares in Echo, which owns Brisbane’s Treasury Casino and The Star in Sydney, soared seven per cent after it flagged its annual profit could rise by about a fifth this year.
Chief executive Matt Bekier believes Echo is well placed for future growth despite competition heating up in the next five to seven years.
“The reality is we have long-dated licences,” Mr Bekier told AAP on Monday.
“We’ve got another 50 years in Brisbane.
“We will have to maximise earnings from all of our assets and I think we’re well placed.”
The Queensland government has shortlisted four bidders for a second casino in Brisbane, including Echo, rival Crown, Chinese property developer Greenland, and Chinese consortium Shun Tak/Far East.
Mr Bekier said as the incumbent operator in Brisbane, Echo took the opportunity to bid for a second licence seriously.
“I don’t want to be overly confident when you see what has happened in other markets,” he said.
“We know Brisbane really, really well and we’ll try to leverage that but I can’t really talk to what we’re putting to the government.”
Echo expects its normalised annual net profit to rise to between $150 million and $153 million, from $126.9 million in 2012/13.
It also expects earnings before interest, tax, depreciation and amortisation (EBITDA) to rise to between $430 million and $435 million, from $372.9 million.
However its final EBITDA result could be affected by volatility, win rates and turnover at its VIP Rebate businesses.
While Echo’s earnings look promising, analysts are concerned about its medium to long-term prospects as it prepares to bid against rival Crown and Chinese interests later this year.
Tyndall Asset Management analyst James Nguyen said Echo’s upgraded earnings guidance was encouraging but there were still some major uncertainties.
“Operationally things are going much better and it shows they’re getting traction in both Sydney and Queensland but we’re still concerned about the medium to long-term,” he said.
Investors were worried about Crown’s Barangaroo high rollers operation coming online in 2019 and a potential second casino in Brisbane next door to Echo’s Treasury casino.
Morningstar analyst Brian Han said Echo had the financial capacity to bid for a second casino in Brisbane.
“Despite the sluggish consumer environment they look like they’re getting their act together,” he said.
He said Echo needed to bid against Crown in Brisbane to protect its interests.
Shares in Echo closed 21 cents higher at $2.98.