Macao casinos report strong Q1 earnings
Updated: 2011-04-21 06:53
By Joy Li(HK Edition)
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Galaxy Entertainment Group Ltd and Wynn Macau Ltd, two of the six major casino operators in Macao, reported strong earnings growth for the first quarter on Wednesday, flagging another boom year for the sector.
Casino operator Galaxy Entertainment, 20 percent owned by European private equity firm Permira, posted a 71 percent surge in first quarter earnings before interest, taxes, depreciation and amortization, raking in a total of HK$712 million compared with HK$417 million a year ago.
Galaxy rose as much as 6.9 percent to HK$13.94 in Hong Kong trading on Wednesday, the highest intraday level since it began trading in October 1991.
Wynn Macau, meanwhile, reported a 47 percent surge in revenue to $865.7 million for the first quarter.
First quarter cash flow, measured as adjusted property earnings before interest, taxes, depreciation and amortization, advanced 50.2 percent to $272.8 million. The growth was driven by a 44.7 percent rise in the VIP segment, while mass market was up 29.2 percent.
"The booming industry environment in Macao spurred the bright results of these casino operators. Looking forward, we are positive towards their second-half performance," said Donald Cheng, a gaming analyst at Haitong International Securities in Hong Kong.
Monthly gross turnover in the world's biggest gambling hub rose 48 percent in March as an influx of mainland gamblers laid on more bets, according to Macao's Gaming Inspection and Coordination Bureau. Visitor arrival rose 5 percent to 2.1 million in February, with more than half from the mainland, according to the city's tourism agency.
Gambling revenue for Macao's six major casinos reached 58.5 billion patacas in the first three months of 2011, 43 percent higher than a year earlier, the bureau said.
JPMorgan wrote in an April 12 research report that the Macao gaming sector is "too early to take profit", which is backed by abundant potential positive catalysts.
Kenneth Fong, the author of the report, argued that since gaming revenue can be heavily affected by seasonality factors. April, with five weekends and the Easter holidays, and May, with Golden Week boosting the VIP side, will see casino operators doing even better. Meanwhile, new supply is also likely to lift up demand, as has been seen historically, said Fong.
Galaxy Entertainment will open its HK$14.9 billion Galaxy Macau on May 15, which is targeting the mainland's emerging middle-class that has yet to travel there, according to the company' 2010 annual result statement.
China Daily
(HK Edition 04/21/2011 page2)