UPDATE: Macau January Gambling Revenue Up 35% On Year At MOP25.04 Billion
February 01 2012 - 4:46AM
Dow Jones News
Gambling revenue in Macau rose 35% in January from a year
earlier, government statistics showed Wednesday, as players from
mainland China continued to fuel solid growth. But the outlook for
the rest of the year remains murky.
Macau, the only place in China where casino gambling is legal,
saw gambling revenue rise to MOP25.04 billion (US$3.13 billion)
last month, up from MOP18.57 billion a year earlier, according to
data from Macau's Gaming Inspection and Coordination Bureau. The
figure was bolstered by the week-long Lunar New Year holidays but
fell short of the all-time monthly high of MOP26.85 billion hit in
October.
The Chinese territory remains the largest gambling center in the
world many times over. Last year it raked in more than five times
the gambling revenue analysts estimate the Las Vegas Strip
earned.
Macau's revenue growth has been explosive since the end of 2009
as players have continued to place bets regardless of China's
tightening measures and local government policies aimed at slowing
growth to a more measured pace, but analysts have a less bullish
outlook for 2012. Wells Fargo analyst Cameron McKnight is one of
the most bearish with a forecast for 11% gambling revenue growth
this year compared with last year's blistering 42% rise.
Investors are particularly concerned about whether the fierce
growth in VIP gambling, which accounts for nearly 75% of all
gambling revenue in Macau, is sustainable. The VIP market is driven
by junket operators, which bring high-spending gamblers to the
casinos, issue them credit and collect debts in exchange for
commissions. Since gambling debt isn't recognized in China, there
are no legal means for casinos to recover debts owed to them by
Chinese players.
But despite similar concerns raised by analysts and investors
the past two years, Macau's revenue growth has managed to exceed
expectations.
"The year-on-year comparison forecasts are becoming more and
more challenging for us," said CIMB analyst Teng Yee Tan, noting
the opaqueness of the junket business. He is currently forecasting
15%-18% growth for 2012.
Shares of casino operators continue to outperform other listed
stocks in Hong Kong with Galaxy Entertainment Group Ltd. (0027.HK),
which opened its enormous flagship Galaxy Macau casino in May, up
21% year to date at HK$17.22. Shares of Sands China Ltd. (1928.HK),
the Macau unit of Las Vegas Sands Corp. (LVS) set to open a massive
expansion project this year, have also risen 21% to HK$26.45. Hong
Kong's benchmark Hang Seng Index has risen 10% so far this year to
20,333.37 points.
-By Kate O'Keeffe, Dow Jones Newswires; 852-2802-7002;
kathryn.okeeffe@dowjones.com