Inside Asian Gaming

INSIDE ASIAN GAMING | November 2011 16 CLSA Market Outlook Macau gaming-revenue growth versus renminbi appreciation YoY Source: Bloomberg, DICJ, CLSA Asia-Pacific Markets to fend off hot-money inflow, which drove the currency down. The movement of the two has quickly aligned as Beijing resumed the gradual appreciation of the renminbi. Infrastructure—key to Macau’s growth Integrated resorts, infrastructure improvements and hotel rooms are also needed to support the next leg of growth in Macau’s gaming market. Integratedresortsarecrucialinenhancing the attractiveness of Macau, while the Cotai properties, once completed, should boost visitor arrivals. Improved infrastructure will shorten the travel time to Macau. Finally, hotel rooms are important for overnight visitors and better-quality accommodation at reasonable rates will attract more tourists to stay for longer in Macau. Integrated resorts to more than double Currently, there are four integrated resorts (IRs) on Cotai: The Venetian, Four Seasons, City of Dreams and Galaxy Macau. The number of IRs on Cotai should more than double over the next decade, with the completion of Sands Cotai Central, Macau Studio City, SJM Cotai, MGM Cotai andWynn Cotai. This will boost growth in Macau’s tourism and gaming industries. Sands Cotai Central (formerly known as sites 5 and 6) would be the next addition to Cotai Strip, expecting to open in 1Q12 and will then gradually ramp up throughout the year. Wynn Macau has reached an agreement with the government regarding a plot on Cotai, while Macau Studio City, SJM and MGM are still actively engaging with the government. These projects are likely to open over 2015-18. Meanwhile, some large IRs are pending government approval to start construction. After these projects are completed, there will still be plenty of vacant sites available on Cotai, especially if we were to consider that the government is only allowing 3-5% table growth between now and 2020. New infrastructure to drive visitor growth Numerous infrastructure projects are underway and some should be completed by 2015. The Guangzhou-Zhuhai intercity mass transit and the Hong Kong-Zhuhai-Macau Bridge will help connect the major cities in the Guangdong province, allowing visitors to travel from Guangzhou to Macau in less than an hour. The construction of the Shenzhen- Hong Kong express rail link will connect Hong Kong/Macau to China’s high speed-rail network, allowing non-Guangdong tourists to visit Macau conveniently. Expansion of the Zhuhai airport will also help drive visitor flow from North China to Macau. The new projects will seamlessly connect major cities in Guangdong, creating a business cluster that houses 30 million people (30% of the province’s total population). People’s mobility across the region will be enhanced, driving visitor inflow for major tourism destinations like Macau. Another major development is the Hong Kong-Zhuhai-Macau Bridge, which will connect the west side of Hong Kong to Macau and the Chinese city of Zhuhai, which is situated on the west side of the Pearl River Delta. Construction formally began on 15 December 2009 and it should be completed in 2015-16. It will shorten the distance between Hong Kong and Macau/Zhuhai from 60km to 30km, and reduce the journey time by half an hour, for an estimated charge of Rmb100-150 each way. The Guangzhou-Zhuhai intercity mass transit that was completed in January 2011 will also help drive citizens from other parts of Guangdong to Macau. The highspeed intercity railway links between New Guangzhou Station in Panyu, Guangzhou and Zhuhai Airport in Zhuhai, via Shunde, Zhongshan and Jiangmen, in Guangdong. The railway began operation in January 2011, with official services running between Guangzhou and Zhuhai North, fare ranging Rmb36-44. Travelling between Guangzhou South and Zhuhai has now been shortened to 46 minutes through nonstop services/76 minutes (including all stops). The Shenzhen-Hong Kong expressway link is part of the high speed-rail project of the central government that aims to connect major cities across the nation. Expressways that link Shenzhen and HK are scheduled for completion by 2014. The 32.8km, six-lane expressways link eastern Guangdong with adjacent provinces of Fujian and Jiangxi via the Shenzhen-Huizhou and Shenzhen- Shantou expressways. With the completion of the link, travel time from Hong Kong to the eastern part of Shenzhen will be cut by 30 minutes. Full connection between Zhuhai North and Zhuhai airport is scheduled for completion by October 2011, with travel Hong Kong-Zhuhai-Macau Bridge rendering Source: cnbridge.cn