The Chips Are Down in Macau
Written on October 5, 2007 by admin
Shares of casino companies with interests in Macau plunged after preliminary data showed growth in Macau gambling revenues were below expectations, analysts said.
Analyst Celeste Mellet Brown said early figures showed September gambling revenue in the southern Chinese gambling enclave grew 55 percent from the previous year, below her forecast for more than 75 percent growth. The official data is due out in about six weeks, Brown, of Morgan Stanley, said.
Investors had been cheered in recent months by the strength of casino operators in Macau, which is widely touted as the next Las Vegas and now exceeds the Las Vegas Strip in gambling revenue.
“The gaming revenue number implies that the new supply that came to the market shifted revenue rather than grew the market incrementally,” Brown wrote in a client note.
Shares in the company run by billionaire Sheldon Adelson, Las Vegas Sands Corp., which opened the 3,000-room Venetian Macao on Aug. 28, dropped 11.8 percent Wednesday, or $17.03, to $127.53.
Shares in Wynn Resorts Ltd., headed by casino magnate Steve Wynn, fell 9.9 percent, or $16.43, to $149.40. The company opened the Wynn Macau in early September last year.
The setback came after a large run-up in the shares over the last week caused when a brokerage representative came back from a conference in Macau with rumors that gambling revenues had grown by 100 percent, said Jefferies & Co. analyst Lawrence Klatzkin.
The smaller gain, although “pretty decent,” gave shareholders the impetus to sell and lock in profits.
“Some people said, ‘When do I take some money off the table? And I better take some off now,’” Klatzkin said. “It kind of snowballed into much more than it was.”
He added that gambling capacity has increased 93 percent in Macau from a year ago after several recent casino openings including the Venetian Macao in August, the Crown Macau Hotel Casino in May and the Grand Lisboa in February.
Even after the pullback, Las Vegas Sands shares are up 41 percent for the year, while Wynn shares are up 59 percent.
Shares of MGM Mirage, which is set to open its $1.1 billion joint venture, the MGM Grand Macau, later this year, dropped 3.4 percent, or $3.20, to $91.70.
Shares in Melco PBL Entertainment Ltd., which runs the Crown Macau, declined $1.14, or 6.0 percent, to $17.78.
Technorati Tags: cotai, Crown Macau, Entertainment, macao, macau, Melco Crown, Venetian Macao
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