Macau Casino Revenue Surges as Gamblers Return After World Cup
Macau Revenue Surges as Gamblers Return After World Cup
Stephen Shaver/Bloomberg
A security guard stands watch outside the entrance to Stanley Ho's Casino Lisboa in Macau.
A security guard stands watch outside the entrance to Stanley Ho's Casino Lisboa in Macau. Photographer: Stephen Shaver/Bloomberg
July 30 (Bloomberg) -- Larry Haverty, a portfolio manager at Gamco Investors Inc., talks with Bloomberg's Susan Li about the outlook for Wynn Resorts Ltd. and Las Vegas Sands Corp., and his investment strategy. Wynn Resorts, owner of the Wynn and Encore casino resorts in Las Vegas and Macau, reported second-quarter profit doubled after the opening of its second property in the only part of China where casinos are legal. (Source: Bloomberg)
Casino revenue in Macau, the world’s biggest gambling hub, surged 70 percent in July from a year earlier as bettors resumed wagering on card games and slot machines in the Chinese city after the soccer World Cup.
Sales of 16.3 billion patacas ($2 billion) in July was also 20 percent higher than in June, according to data from Macau’s Gaming Inspection and Coordination Bureau. The World Cup had kept some gamblers away in June, when casino revenue fell 20 percent from the previous month.
The start of the summer holidays also boosted business for casino operators in Macau, the only place in China where casinos are legal. Billionaire Stanley Ho’s SJM Holdings Ltd. has gained 63 percent in market value this year as junket operators, who bring high-stakes gamblers to casinos as well as lend money and collect debts, have benefited from a credit boom in China.
“These results are better than expected and confirms our belief that Macau gaming revenue will continue to be strong throughout 2010, despite a modest cooling of the Chinese economy,” David Katz and Stephen Shulstein, analysts at Jefferies & Co. in New York, said in a research note.
Las Vegas Sands Corp., controlled by billionaire Sheldon Adelson, climbed 4.1 percent to $27.96 in New York trading, the highest level in almost two years. The stock has surged 87 percent this year.
Galaxy Entertainment Group Ltd., part-owned by Permira Advisers LLP, gained 3.5 percent to HK$5.60 at the 4 p.m. close of trading in Hong Kong.
Wynn, SJM
The Hong Kong Jockey Club had HK$35 billion revenue from soccer betting in the year ended June 2009. Police in Hong Kong, an hour’s ferry ride from Macau, seized records of HK$361 million ($46 million) worth of illegal bets on World Cup games, the South China Morning Post reported July 17.
The end of the World Cup tournament on July 11 helped boost Macau’s revenue in the first 19 days of July, CLSA Ltd. analysts Aaron Fischer and Huei Suen Ng said last month.
Junket operators in Macau have benefited from China’s economic growth, coupled with a lending surge. The so-called VIP gamblers they bring to casinos contribute about 70 percent of the city’s gambling revenue, CLSA’s Fischer and Ng estimate.
The world’s fastest-growing major economy is cooling as China’s government trims credit growth after outstanding loans increased to a record $1.4 trillion. The government is also pressing for gains in energy efficiency as a five-year plan comes to an end, and discourages multiple-home purchases.
‘Overdone’ Concerns
China’s economic growth dipped to a 10.3 percent annual pace in the second quarter from 11.9 percent in the first three months of the year.
Still, CLSA’s Fischer forecast “another uptick” for the city’s gambling operators in a July 30 note to clients. “Concerns about policy risks are overdone, given Beijing’s solid backing for the new chief executive,” he said. Fernando Chui was sworn in as chief executive of Macau, a Chinese special autonomous region, in December.
For the first seven months of the year, Macau casino gambling revenue rose 67.5 percent to 102.2 billion patacas.
SJM, the casino operator with the biggest market share in Macau, rose 1.5 percent to HK$6.97 today while second-ranked Sands China Ltd. the unit of Adelson’s casino company, fell 2 percent to HK$11.74.
Market Share
Melco International Ltd., one of the partners that control Melco Crown Entertainment Ltd., added 1.5 percent to HK$3.30 and Wynn Macau advanced 1.1 percent to HK$13.20.
SJM has a market share of 32 percent, Goldman Sachs Group Inc. analysts Simon Cheung and Justin Kwok said in a report today. Sands China had 20 percent while Melco Crown and Wynn Macau had 15 percent each, they said.
Galaxy Entertainment’s share was 12 percent and MGM Grand Paradise SA, the Macau venture between Pansy Ho and MGM Resorts International, had 7 percent, the Goldman analysts said.
Macau, a former Portuguese colony, surpassed the Las Vegas Strip as the world’s biggest gambling hub in 2006. Macau’s casinos had a record 119 billion patacas in revenue last year, 9.7 percent higher than in 2008.
Casinos contribute 99 percent to Macau’s gambling revenue with the rest coming from greyhound racing, horse racing and lotteries.
To contact the reporter on this story: Wendy Leung in Hong Kong at wleung12@bloomberg.net.
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