Casino revenue growth slows down in September

MGM China rose 4.3 percent in Hong Kong trading yesterday as September casino revenue numbers show a 38.8 percent rise to MOP 21.2 billion

Local casino revenue rose 38.8 percent to MOP 21.2 billion in September, according to data published on the website of the local gaming regulator yesterday.
It was the first month since January that gaming income grew less than 40 percent and it also represents a sharp drop from the previous month. In August the industry recorded record high revenue of MOP 24.77 billion, up by 57 percent year-on-year.
Analysts expect the casino sector to cool down even more in the future.
Local gaming revenue is “poised to decelerate as the economy slows,” according to a Deutsche Bank report. “Macau revenue growth may fall towards 10 percent in the coming quarters,” the report signed by Ma Jun, the bank’s Hong Kong-based chief economist, said.
Twelve percent of global investors in a Bloomberg poll last week predicted growth in China would slow to less than 5 percent within a year, a pace unseen in the past two decades. HSBC Holdings foresees an expansion of 8.5 percent to 9 percent in coming quarters.
Local gaming revenue reached MOP 194.4 billion in the first nine months of the year, 46 percent higher than a year earlier. Even though there are three months still to be accounted for, the accumulated total is already higher than in the whole of 2010, when it hit MOP 188.3 billion.

Stock panic

The announcement from the Gaming Inspection and Coordination Bureau managed to give a short-lived boost to the Hong Kong-listed casino stocks yesterday. However, most operators ended up taking further losses after two previous days of heavy sell-out.
For instance Galaxy Entertainment Group rose as much as 4.2 percent before closing down by 5.8 percent at HKD 8.87, while Sands China was gaining 3.3 percent but dropped 5.5 percent to HKD 15.1.
The exceptions were MGM China, which advanced 4.3 percent to HKD 8.56, and SJM Holdings.
The operator founded by tycoon Stanley Ho Hung Sun climbed as much as 8.2 percent before closing up by 2.1 percent at HKD 10.72, after declining by a record 25.5 percent on Monday.
“Profit taking and arguably some panic selling hit the Macau sector,” Aaron Fischer and Huei Suen Ng, consumer and gambling analysts at CLSA Asia-Pacific Markets, said in a research note. “The industry dynamics remain attractive,” the analysts said.
“Many companies expect October to be a record month considering Golden Week and forward bookings,” the note adds. “The industry dynamics remain attractive with limited threat from gaming in other Chinese locations; only six operators and only three percent to five percent expansion in supply over the long run.”
Wynn Macau’s two hotels and Mandarin Oriental have been fully booked since Saturday, the start of China’s week-long national holiday.
“It’s a very busy period for us,” Katharine Liu, Wynn’s director of communications, told Bloomberg. All of Wynn Macau’s 1,009 rooms will be occupied this week, she said.
The Mandarin Oriental Macau has been full since September 30 and continues to receive enquiries for available rooms, said Ada Chio de la Cruz, the hotel’s director of communications.
Occupancy at Sands China’s 360-room Four Seasons Hotel on the Cotai Strip has been “strong,” said Julius Santos, director of marketing. “As far as I can see, if there’s a slowdown, it’s not very evident.”

V.Q.