Macau casino shares hit by fall in revenue growth
Macau gaming stocks fell yesterday after government data showed an unusually sharp slowdown in the territory's gaming revenue growth.
In addition, Sands China stands to book a charge of up to US$101.1 million because it withdrew its appeal to gain two land parcels, thereby ending its hopes of building a multibillion-dollar casino on the land.
Hong Kong shares of MGM China yesterday dived 6.24 per cent, with Melco Crown Entertainment down 5.16 per cent, Galaxy Entertainment down 4.25 per cent and SJM Holdings down 4.06 per cent. Only Wynn Macau, down 0.95 per cent, and Sands China, down 0.75 per cent, were comparatively stable.
Macau's gaming revenue rose 7.3 per cent to 26.08 billion patacas last month, according to Macau government data. This is the slowest growth since July 2009.
From January last year to April, the year-on-year growth of Macau's gaming revenue was between 20 and 60 per cent every month, hitting a high of 57 per cent last August.
'One of the main reasons is the slowdown in VIP revenue. I do not rule out the possibility of a slowdown in the China economy as a factor,' said a Hong Kong stock analyst.
On May 30, Sands China's two subsidiaries - Venetian Macau and Venetian Orient - withdrew their appeal to the Court of Second Instance in Macau over the government's rejection of their application for land, Sands China said yesterday.
In December 2010, the Macau government rejected the two units' application for land concessions for Parcels 7 and 8 on the Cotai gaming strip in Macau, which had an area of 110,200 square metres. Days later, police conducted a vice raid on Sands China's Venetian Macau casino hotel, arresting more than 100 women.
If Sands China fails to get Parcels 7 and 8 or compensation, it will have to book a maximum charge of US$101.1 million due to construction costs, the firm said. Sands China had previously planned a multibillion-dollar 6,000-room development with four casino hotels on Parcels 7 and 8. 'Due to [Sands China chairman] Sheldon Adelson's increasingly bad relations with the Macau government, Sands realised it had no chance of winning the land. Sands withdrew because it realised it had no hope of winning it,' said a Macau analyst.
After reports that Adelson had ordered probes on some senior Macau officials were made public, 'that ruined his chances of getting any favour from the Macau government', the Macau analyst said.
United States court documents filed by Steve Jacobs, Sands China's former chief executive, alleged that around 2009, Adelson ordered the probes in a bid to exert leverage to thwart regulations adverse to the firm's interests.
The Macau analyst said: 'Sheldon's dealings with the Macau government have never been as smooth as Steve Wynn and local players like Stanley Ho.'