The explosive growth in Macau gaming revenues continued in December, bringing in 23.6 billion patacas ( billion), a 25 percent increase over December 2010. For the year, the SAR’s gaming industry posted revenues of 268 billion patacas (.5 billion), an increase of 42 percent over 2010 figures.
The December figures concerned analysts, however. The increase of 25 percent was much lower than previous months, which had averaged 35 percent to 48 percent throughout the year. Analysts differed on what that means. While no analyst predicted an end to growth, they did differ on the extent.
“The main concern would be whether the high-roller customers will get credit lines,” said Philip Tulk, an analyst at Royal Bank of Scotland, who reflected concern about a slumping Chinese economy. He predicted only a 20 percent growth rate in 2012.
Teng Yee, an analyst with CIMB in Hong Kong, said the Chinese economy is a concern because it would impact the all-important VIP segment. His growth estimate is only between 15 percent and 20 percent.
Carret & Co., Deutsche Bank and Credit Suisse have all pegged growth between 19 percent and 20 percent.
Credit Suisse analysts Gabriel Chan and Isis Wong say the opening of Sands China’s Cotai Central starting in February should increase visitation a bit.
“We may see meaningful earnings upgrades post 4Q11 results and better-than-expected GGR growth after Sands China’s Cotai Central opening,” they wrote in a note to investors.
Wells Fargo Securities analysts Cameron McKnight and Barry Jonas were the bears of the group, estimating only a 6 percent to 11 percent growth rate for 2012.
Union Gaming Group’s Grant Govertson is much more bullish.
“We continue to believe the VIP segment should remain strong through at least the early part of 2012,” he advised investors, “as our channel checks suggest VIP demand is growing, not shrinking (despite macro China fears) with junkets asking for additional tables at many/most properties. Further, new supply in the form of Sands China’s Cotai Central should be a driver of demand, much as other new properties have driven demand previously (most recently Galaxy Macau).”
