SJM Sees 2013 Macau Casino Revenue to Grow Less Than 15%

SJM Holdings Ltd. (880), Asia’s biggest casino operator by revenue, said industry revenue in Macau will probably increase less than 15 percent this year.

“It will be in the low teens,” Chief Executive Officer Ambrose So said in an interview in Beijing. “We have a bigger base, so low teens is still very good.”

Macau’s casino revenue growth slowed to 14 percent last year from 42 percent in 2011, as the local government limited casino table additions in the only place in China where they’re legal. High-stakes gamblers from the mainland are curbing spending after a slowdown in the world’s second-largest economy last year, according to Leon Liao, a Hong Kong-based analyst at Jefferies Hong Kong Ltd.

“Overall, the economy is not improving and we don’t see demand on the VIP side recovering from last year,” said Liao. “The government is putting in more anti-corruption measures in mainland China and this is also a big risk.”

SJM fell 1.7 percent to close at HK$18.56 in Hong Kong trading today. MGM China Holdings Ltd. (2282) lost 3.8 percent, Sands China Ltd. (1928) fell 1.5 percent, Melco Crown Entertainment Ltd. (6883) lost 2.1 percent and Galaxy Entertainment Group Ltd. (27) lost 2.5 percent. The benchmark Hang Seng index gained 0.1 percent.

Gross gambling revenue expansion for the first two months at about 9 percent lags behind the consensus 13 percent growth estimate for 2013, Jefferies analysts led by Liao wrote.

China’s services industries last month expanded at the slowest pace since September, according to a March 3 report, adding to concerns that China’s rebound from a seven-quarter slowdown is losing steam.

The VIP, or high-rollers, business accounts for about two- thirds of casino revenue in Macau. MGM China Holdings Ltd., the Macau casino venture between a daughter of gambling mogul Stanley Ho and MGM Resorts International (MGM), said Feb. 27 it hasn’t seen any sign of a Chinese crackdown on the junket operators who offer credit and bring VIP gamblers to Macau.

Intensifying Competition

SJM, founded by Ho, owns 20 of the 35 casinos in Macau, including its flagship Grand Lisboa in Macau peninsula. It faces intensifying competition as rivals including Sands China Ltd. and Galaxy Entertainment Group Ltd. expand in the former Portuguese colony.

Sands earlier said it plans to invest at least $2.5 billion to build the Parisian, its fifth resort in Macau. The Parisian will have a replica of the Eiffel Tower and facilities to attract gamblers from China traveling with their families.

Smaller competitors such as Wynn Macau Ltd. and MGM China have also been given approval to develop casinos in Macau’s Cotai strip, an Asian equivalent of Las Vegas strip.

SJM, which won a land grant in October to develop its first casino resort in the Cotai area, is still awaiting the formal approval from Macau government to begin construction.

Gambling on the Las Vegas Strip increased 13 percent in December to $588.2 million, according to the Nevada Gaming Control Board. That marked an acceleration from previous months, with revenue from July to year-end advancing 5.1 percent, the agency said.

To contact Bloomberg News staff for this story: Liza Lin in Shanghai at llin15@bloomberg.net; Vinicy Chan in Hong Kong at vchan91@bloomberg.net

To contact the editors responsible for this story: Anjali Cordeiro at acordeiro2@bloomberg.net; Frank Longid at flongid@bloomberg.net

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