Macau table gaming revenues in the first half of May appear to be up by as much as 90 percent year on year, CLSA Asia-Pacific markets told Asian Gaming Intelligence.
If the trend is extended over the whole month, it would indicate that the Chinese government’s efforts to curb personal credit issuance within the mainland economy—and by extension to slow the supply of VIP credit to the Macau casino gambling markets—is not having the desired effect.
“According to our channel checks, Macau table gaming revenues excluding slots in the first half of May appear to be up around 90 percent year on year to MOP9 billion,” said Aaron Fischer, a Hong Kong based senior analyst at the independent brokerage and investment group.
“This is up 40 percent month on month. The month of May benefits from the extended Labour Day holiday at the start of the month, but so did last year’s base. It looks from the early indications that we are on track for a monthly all time record,” added Mr Fischer.
Mr Fischer suggested that if Macau gaming revenues are accelerating rather than slowing down despite fiscal tightening in China, it could be as a function of competition between Macau operators for VIP business.
“It looks like some of the casino operators are significantly increasing their working capital, i.e. lending to junkets, which is fuelling the VIP play,” he added.
“In terms of revenue market shares we understand Wynn is up strongly following the opening of Encore and we believe SJM and Galaxy are also doing well.
“We believe these three players are releasing more working capital into the system.
“On the other hand, we understand Sands China is being less aggressive in chasing the VIP market and focusing more on the more profitable mass market and non-gaming segments,” stated Mr Fischer.
Hong Kong-listed stocks of the Macau casino operators experienced volatile trading today, with SJM performing best, closing 6.2 percent up on the day on the back of its strong first quarter 2010 figures, released after the close of the market on Tuesday.
During Wednesday’s trading in Hong Kong, movements in Macau gaming stock prices mostly reflected a general sell off on the Hang Seng linked to nervousness about the European sovereign debt crisis. The market closed down 1.8 percent to 19,578.98, its lowest close since 8th February.
But Mr Fischer suggested the long term prospects for Macau gaming stocks looked good.
“We believe positive fundamentals in the Macau gaming market continue to create a good buying opportunity,” said Mr Fischer.
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