August 23, 2018 / 11:00 PM / in 8 months

UPDATE 2-Australia Star Entertainment's key profit measure hits record, shares soar

* Star normalised FY profit A$258.1 mln vs A$214.5 mln pvs yr

* International VIP turnover up 54.3 pct

* Shares up as much as 10 pct (Recasts with underlying profit, adds shares, analyst quote)

By Byron Kaye

SYDNEY, Aug 24 (Reuters) - Star Entertainment Group , Australia’s second-biggest casino operator, announced a key profit measure had risen by a fifth for the year to a record as Chinese high rollers wagered vast sums in its resorts, sending its shares up 10 percent.

The result underscores the rebound underway in the numbers of visiting Asian gamblers since a Chinese government crackdown in 2016 led to the arrest of 17 staff of larger rival Crown Resorts Ltd and hammered Australian casino turnover.

Sydney-based Star said “normalised” annual net profit, which calculates profit without changes to the house win rate, was a record A$258.1 million ($188.8 million) for the year to end-June compared to A$214.5 million in the previous year.

Turnover from “International VIPs” - generally wealthy Chinese tourists - shot up 54.3 percent to $61.2 billion, the company said.

And it added that the upswing appeared to be continuing in the new financial year.

“Whilst a short period of time, VIP volumes continue to be pleasing,” it said in a statement, referring to the current financial year.

Earlier this month, Crown Resorts, which is 46 percent owned by billionaire James Packer, posted a 12.7 percent jump in yearly profit, also due to a spike in Chinese tourist turnover.

Shares of Star rose as much as 10 percent in morning trading, and were still up 6 percent by midsession, while the broader market was up 0.2 percent. Crown shares were up 1 percent.

“One of the areas that Australian casinos have really struggled with (is) trying to attract these ‘whales’, big spending gamblers, particularly out of Asia,” said James McGlew, executive director of corporate stockbroking at Argonaut.

“Star has said that its VIP volumes are starting to pick up again.”

Including an unusually high win rate for “International VIP” gamblers, net profit for Star fell 44 percent to A$148 million.

Star is trying to capitalise on a stampede of tourists from China, the biggest supplier of visitors to Australia, by developing its resorts in Sydney, the northern city of Brisbane and the popular Gold Coast tourist destination.

Among those developments, it wants to build a skyscraper resort on the Sydney waterfront, a mile from a casino tower that Packer’s Crown is building.

Star declared a final dividend of 13 Australian cents, up from 9 cents the previous year. ($1 = 1.3669 Australian dollars) (Additional reporting by Nikhil Kurian Nainan in BENGALURU; Editing by Muralikumar Anantharaman)

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