Inside Asian Gaming

December 2008 | INSIDE ASIAN GAMING 7 Cover Story Cool Down Recession and a slowing in table supply are not necessarily all bad news for all Macau gaming operators, says Goldman Sachs M acau’s gross gaming revenues are likely to fall by 17% in 2009, estimates a new report from Goldman Sachs. But the suspension or delay of Macau gaming projects because of the global credit squeeze could actually benefit some operators, adds the investment house. “Over the past three months, the industry dynamics of Macau’s gaming sector have changed drastically,” from showing a robust 54% top line growth in the first half of 2008 to respective declines of 1% and 3% year-on-year (yoy) in September and October 2008, according to the research paper. “In addition to the tightened policies by the Chinese government; the severity of the global credit crunch and the suspension of LVS’s casino development in the Cotai Strip were unexpected by the market and our team. Against the macro headwinds, the demand outlook for Macau’s gaming sector will remain challenging next year, in our view. We revise down our gaming revenue forecasts, expecting -17% decline in 2009E (vs. +18% previously), followed by +9% recovery in 2010E.” Goldman Sachs adds that after a potentially sharp fall in net win per table in 2009, it expects reductions in supply side growth to stabilise table net wins. Macau’s gaming revenue growth has decelerated drastically since Sept 08 Macau gross gaming revenue monthly growth, Jan08-Oct08 We expect Macau’s gaming revenue to fall 17% in 2009E, in line with 1998/99 Macau gaming revenue and GDP YoY growth, 1997-2012E Source: DSEC, DICJ, Macaodaily. Source: DSEC, Company data, Goldman Sachs Economics Research estimates, Goldmen Sachs Research estimates.