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Macau April gaming revenue enough to ease worries of a market slowdown

5 May 2014

By Howard Stutz

The Macau casino industry didn’t produce a third straight $4 billion gaming revenue month in April, but the final total and double-digit increase were enough to ease worries of a market slowdown.

Macau’s Gaming Inspection and Coordination Bureau said Friday casinos collected $3.9 billion in gaming revenue during April, a 10.6 percent increase over April 2013.

The figure might seem, paltry to investors after two straight $4 billion revenue months, including February’s all-time single month record of $4.8 billion. Three American casino operators — Wynn Resorts, Limited, Las Vegas Sands Corp., and MGM Resorts International — operate casinos in Macau.

Union Gaming Group principal Grant Govertsen, who is based in Macau, told investors the availability of real-time market data often-times leads industry watchers to stir up unfounded fears.

“The reality is that the market naturally ebbs and flows, and can and does slowdown in advance of holiday periods like the now-ongoing May holiday, and there doesn’t have to be a perfect explanation every time,” Govertsen said.

Skittish investors have expressed concerns over Macau near-term growth trajectory and deteriorating liquidity in the high-end wagering credit market. Analysts said both items had been given considerable media attention in financial news markets in recent weeks.

During their first quarter earnings releases in the past two weeks, casino company executives spent time on conference calls explaining why they are bullish on Macau.

Wynn Resorts collected 75 percent of its overall $1.51 billion in quarterly revenue from Macau. Las Vegas Sands garnered more than half of its total $4.02 billion in company revenue from Macau. MGM Resorts, which has the smallest piece of the Macau market, expects to grow its presence in the coming years.

“Nothing has stopped them and I don’t think anything will,” Las Vegas Sands Chairman Sheldon Adelson said last month when asked if Asian casino customers have reduced their gambling spending habits. “If there is a momentary blip in the road, it’s like a speed bump in a private housing development, where people don’t want you too drive fast.”

Deutsche Bank gaming analyst Carlo Santarelli called the March results, “a positive surprise,” adding the final figure was in line with most forecasts.

For the first four months of the year, Macau gaming revenue totals are up 17.5 percent over the same four months of 2013. Last year, Macau produced a record $45.2 billion in gaming revenue.

Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said investors should note the April results, along with commentary Thursday from Wynn Resorts Chairman Steve Wynn on his company’s growth projections from the market will “help ease some of the negative sentiment that has built over the Macau names in recent weeks.”

The three Las Vegas-based companies are building multibillion-dollar resorts on Macau’s Cotai Strip: the $4 billion Wynn Palace, the $2.9 billion MGM Cotai and the $2.7 billion Las Vegas Sands Parisian. All three are expected to open by 2016.


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Howard Stutz
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