Macau gaming revenues increase 1.5 percent in July, smallest increase in 36 months

Let’s put some perspective on Macau’s July monthly gaming revenue total, which was termed a disappointment by some in the investment community.

The Chinese gaming region’s three dozen casinos, including the first phase of the $4.4 billion Sands Cotai Central that opened in April, collected almost $3.1 billion from gaming, a 1.5 percent increase over July 2011.

The figure was the smallest single-month revenue increase in three years. The last year-over-year monthly revenue decline in Macau was in June 2009.

That one-month total, however, is more than half of what the entire Strip produces in a single year. Macau collected a record $33.5 billion in gaming revenues during 2011, and the region is on pace to eclipse that mark by 15 percent to 20 percent this year.

So a 1.5 percent increase is a bad month?

“We view the data as somewhat better than feared, given expectations have been reset lower since disappointing second quarter results and recent chatter called for a monthly year-over-year decline,” Susquehanna International gaming analyst Rachael Rothman told investors.

Many analysts thought Macau casinos would see a decline in gaming revenues after Typhoon Vicente stopped ferry service between Macau and Hong Kong on July 23 and July 24.

Still, the percentage increase was the second time in three months that Macau casinos recorded just a single-digit rise.

Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said in a research note that Macau’s gaming revenue growth curve had flattened. In addition to the typhoon, visitation to Macau slowed because of rain and flooding in several key Chinese feeder markets.

“All that said, we actually believe the (percentage) comparison could be viewed favorably by the Street,” Wieczynski said. “We continue to get the sense that the Macau market as a whole remains in a transitional phase.”

He said Macau could benefit from greater accessibility for residents of mainland China, which would boost the mass market segment brought into the Special Administrative Region.

Las Vegas Sands Corp., Wynn Resorts Ltd. and MGM Resorts International all operate casinos in Macau and have seen declines in their stock prices over concern about slowing gaming results.

Wynn Resorts said Wednesday that it expects to spend $3.5 billion to $4 billion to develop its new casino resort property on Macau’s Cotai Strip. Las Vegas Sands expects to open Phase 2A of Sands Cotai Central on Sept. 20.

“Expectations are low and estimates for the most part have been reset lower, which we believe presents an attractive risk-reward skew for medium-term investors,” JP Morgan gaming analyst Joe Greff told investors.

Greff also said August could return Macau to double-digit gaming revenue increases.

Contact reporter Howard Stutz at hstutz@reviewjournal.
com or 702-477-3871. Follow @howardstutz on Twitter.