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Macau casinos produce record-breaking $4.6 billion in October

4 Nov 2013

By Howard Stutz
Macau’s casino industry shattered its single-month gaming revenue record in October when the market produced an eye-popping $4.6 billion in pre-tax winnings.

The total exceeded the previous record of $3.92 billion set in March of this year.

The Macau Gaming Inspection and Coordination Bureau said Friday the results were a 31.7 percent increase over the October 2012 total. Analysts had been predicting the record month, based on visitation trends into Macau.

“Although most investors expected a new all-time monthly record to be established in October, we believe the degree to which the end result eclipsed the prior record was slightly ahead of consensus expectations,” Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said.

In 2012, Macau — the world’s largest gaming market — produced a record $38 billion in gaming revenues. Through October, the region nearly topped that amount — producing $37.13 billion in just 10 months.

Macau gaming revenues are up 18.4 percent over the same 10 months of 2012 the market’s growth could exceed 20 percent by the time the year is out, analysts said.

The single month revenue record in Macau equals roughly 75 percent of the entire Strip gaming market took in during all of 2012. Macau currently has more than three dozen large and small casinos.

Union Gaming Group Principal Grant Govertsen, who is based in Macau, said the results from October, coupled with projections for the last two months of the year, indicate that Macau will produce seven times more gaming revenues than Las Vegas.

He said Macau’s revenues over the next two months are expected to show across-the-board strength in all gaming segments.

“Our forecast is driven in part by historical trends with average gross gaming revenues in November and December generally running 6 percent or more higher than the January-October gross gaming revenue run-rate,” Govertsen said.

“Economic indicators out of China continue their positive trends,” RBC Capital Markets gaming analyst John Kempf told investors. “We continue to favor Macau exposed gaming names and believe today’s news will be viewed positively by the market.”

Las Vegas Sands Corp., Wynn Resorts, Limited and MGM Resorts International all operate hotel-casinos in Macau. The companies are also in the process of expanding their reach into the market.

For Las Vegas Sands and Wynn Resorts, Macau is the primary driver of gaming revenues.

In the third quarter, Macau revenues of $2.34 billion from Las Vegas Sands’ four developments accounted for more than 65 percent of the company’s overall third quarter revenues of $3.57 billion. As for Wynn Resorts, the company’s two Macau casinos collected $997.6 million accounted for almost 72 percent of the company’s overall revenue total of $1.39 billion.

Las Vegas Sands is finishing another phase of the multiple hotel Sands Cotai Central and is spending $2.7 billion to build a 3,000-room Parisian-themed hotel-casino on Macau’s Cotai Strip region. Wynn is spending $4 billion on the Wynn Palace on Cotai, that is targeted to open during Chinese New Year in 2016.

MGM Resorts collected $808 million in revenues from the MGM Macau during the third quarter, almost 33 percent of the company’s $2.46 billion in overall quarterly revenues. MGM Resorts is spending $2.6 billion on a Cotai resort.

Shares of Las Vegas Sands closed at $69.88 on the New York Stock Exchange, down 34 cents or 0.48 percent. MGM Resorts’ shares, also traded on the New York Stock Exchange, closed at $19.30, up 26 cents or 1.37 percent. Wynn Resorts, which is traded on the Nasdaq Global Select, saw its stock price increase $1.45 or 0.87 percent to close at $167.70.

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