Angus Hewitt: The Bell report was scathing, but it wasn't unexpected. It found Star is unsuitable to hold its casino license in New South Wales, and this was the outcome we anticipated. The report was highly public. So, we already knew a lot of the failings at Star – disguising gambling expenses as hotel expenses, to circumvent Chinese capital flight laws, to facilitating money laundering, poor gambling harm minimization practices, permitting junkets with criminal links to operate at the casino, and just a general lack of transparency with the regulator.

But what we didn't expect is the report actually stopped short of recommending punishment. Punishment could be a number of things – so, fine, suspension, cancellation of the license. Star was instead given 14 days to explain why its New South Wales license should be retained, following which the Casino Commission will actually advise on disciplinary action.

That said, we continue to expect that a complete loss of the Sydney casino license is unlikely. Star has already taken a number of steps to prove reform, including improvements in its anti-money laundering program, which the Bell report itself actually noted was commendable. And the management overhaul is well progressed. That includes an incoming new CEO and restructured leadership team. Of the five senior executives in the firm's fiscal 2021 annual report, only one remains and just three of the seven directors remain. So, there's obviously been a pretty dramatic refresh of both the board and senior management.

We think Star will be given the opportunity to prove suitability and ultimately continue to operate, and it's pretty similar to what happened with Crown. So, Crown's various reviews all found Crown is unsuitable to operate its casino license in Western Australia, Victoria, and New South Wales, but was ultimately provided the roadmap to prove suitability. We think the imposition of a special manager is a likely course for Star, and this has also been observed in Crown's case. So, a special manager would be appointed to oversee The Star's operations for a number of years to monitor the progress of the reform, to prove suitability and ultimately, report back to the Casino Commission in New South Wales to say whether or not that has been done.

So, while we think the complete loss of a casino license in New South Wales is unlikely, the downside of losing the New South Wales license is material. The Star Sydney represents about two-thirds of The Star's pre-COVID earnings. So, this tail risk – while we think it is unlikely, this tail risk is why we assign a very high uncertainty rating for Star, and we think investors require a higher margin of safety before making the investment. Despite that, we still think Star trades at a material discount to our fair value estimate and looks pretty good value at current prices.