James Packer could win USD 1.1B from Crown split

That's according to new analysis by analysts at Macquarie, who say that separating out the currently undervalued Australian casino business from Crown's international interests (including its stake in Macau-focused casino company Melco Crown and its various smaller investments in casinos and the Nobu restaurant chain) would help boost Crown's valuation to $14.95 a share.

Going a step further as Crown has suggested and spinning out the Australian hotels (except for Melbourne's Crown Towers) into a property trust could add another $1.43 per share, according to the Macquarie analysis.

With Crown shares sitting at $13.26 on Monday night, that means that the total value of the two moves would add another $3.12 to the value of Crown shares.

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Based on James Packer's stake of 364.3 million shares, that could add an extra $1.1 billion to the value of his shareholding, which is worth $4.8 billion

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It would also lift the total market value of Crown from the current level of $9.7 billion to around $11.9 billion.

Macquarie says that its current view of Crown is "positive, with or without the proposed de-merger, as the current share price still fundamentally undervalues the Australian assets". It has a valuation of $14.21 on the Crown stock, and a 12-month target price of $15.28.

But the broker believes that a demerger would better highlight the value of Crown's Melbourne casino and hotels, its Perth casino resort and, in a few years time, the new Crown casino at Sydney's Barangaroo on Darling Harbour.

Macquarie is particularly bullish about the prospects for Crown's Melbourne properties, as they are tipped to enjoy strong tourism growth. The picture in Perth is less impressive, with the end of the mining boom still likely to weigh on performance. However, Macquarie seems "some signs of life" in Perth as tourist numbers improve there too.

The Macquarie research speaks to the broad theory that Crown and its team of bankers from Deutsche Bank, Morgan Stanley and UBS have been using to sell the deal – namely that the performance of Melco Crown has effectively overshadowed the performance of the Australian casinos.

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While this was positive when Macau was booming, a sharp slowdown in gaming turnover in the city state has hit Melco's earnings and share price, which has tumbled 30 per cent in the past 12 months

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The outlook in the eastern gaming mecca does not suggest a quick turnaround is coming. The latest gaming data for Macau, released on Monday night, showed gaming revenue fell for the 26th consecutive month, although the summer tourist season meant the numbers were slightly better than expected.

Macau will grow again, but in the medium term it does feel as though it would be better to put a bit of distance between the numbers for Crown's Australian interest and its international ones.

Moves to demerge Crown will take some time – probably in excess of 12 months given regulatory hurdles.

But the Macquarie analysis shows why it is an idea that Packer and Crown will continue to pursue.