* Star H1 net profit A$141.8 mln vs A$118 mln analysts
* "Normalised" H1 profit down 17.7 pct to A$107 mln
* International VIP turnover down 11.9 pct to A$20.8 bln
(Recasts to raise China arrests, adds CEO comment, shares)
By Byron Kaye
SYDNEY, Feb 16 Australia's Star Entertainment
Group Ltd said it will reduce its reliance on Chinese
gamblers, previously the backbone of its business, after a
"freakishly good" win rate masked a sharp downturn in income
from Chinese high-rollers.
The arrest in October of 18 employees of the world's
biggest-listed casino operator outside China, Crown Resorts Ltd
, has up-ended the China-focused business model of
Australian betting houses.
"At this time we're not taking any risks by calling on
customers we don't know. We don't respond to customers we don't
know," Star Chief Executive Officer Matt Bekier said on an
analyst call on Thursday.
In the first earnings update of an Australian casino company
since the arrests, Star posted a surprise record half-yearly
profit of A$141.8 million ($109.3 million), up 135 percent
thanks to a near doubling of its win rate.
But turnover from overseas visitors on gambling junkets,
mainly wealthy Chinese, slumped 27 percent in the two months
after the arrests and the decline was continuing, it said.
Adjusting the win rate to average levels, "normalised" net
profit dipped 18 percent to A$107.1 million.
"We obviously want to be cautious because we just don't have
all of the facts on the table right now," Bekier said of the
fallout from the Crown arrests.
Star, which has its flagship casino on the Sydney
waterfront, planned to cut the portion of Chinese gamblers among
its so-called VIP visitors to 50 percent from 80 percent, he
said. The company hoped gamblers from elsewhere in Asia would
make up the other half of its international VIP revenue.
Like their counterparts across the Asia-Pacific, Australian
casinos sell gambling holidays to Chinese VIPs via junket
operators based in Asia.
China has been cracking down on gambling on the mainland but
is yet to explain the Crown arrests, except to say they were for
suspected "gambling crimes".
It is also yet to charge the Crown employees, which include
the company's head of international VIP sales.
Star shares were flat on Thursday, in line with the broader
Australian market. Since the China arrests, Star shares have
fallen 17 percent, while the broader market has risen 6 percent.
Crown shares, which have lost about 10 percent since last
October, were up 0.7 percent on Thursday.
($1 = 1.2972 Australian dollars)
(Reporting by Byron Kaye; Editing by Stephen Coates)