Winning streak continues into July for Macau

PUBLISHED : Tuesday, 02 August, 2011, 12:00am
UPDATED : Tuesday, 02 August, 2011, 12:00am


Macau's casinos had a blockbuster July, with monthly gambling revenue exceeding US$3 billion for the second time on record.

Its winning streak continued last month as casino revenue rose 48.4 per cent from a year earlier to 24.21 billion patacas, data released yesterday by the Macao Gaming Inspection and Coordination Bureau show. That was just shy of the record 24.31 billion patacas booked in the 'Golden Week' holiday month of May.

Shares in gaming companies soared after the figures were released, with five out of the six licensed casino operators hitting all-time highs. Galaxy Entertainment led the gains, rising 8.2 per cent to a record HK$21.85. Melco International Development jumped 7.4 per cent to close at a three-year high of HK$10.34 per share. Rounding out the rally were shares in Sands China, SJM Holdings, Wynn Macau and MGM China - all of which hit record highs yesterday after gaining between 3 per cent and 5.3 per cent.

Casino revenues in Macau rose 45.2 per cent in the first seven months of the year to 148.34 billion patacas. Union Gaming Research Macau analyst Grant Govertsen yesterday hiked his target for full-year casino revenue growth to 40 per cent, citing the 'current market strength and the addition of new supply that is growing the market', he wrote in a note to clients.

Analysts say Macau's growth probably received a boost from the May opening of Galaxy's HK$15.5 billion, 2,200-room Cotai strip casino resort. But all Macau's casinos have been lifted by a rising tide of high-stakes gambling volumes that has grown furiously and unabated in the two years since the city began its recovery from the financial crisis.

Last month's haul is all the more impressive given the tough year-on-year comparison: casino revenue soared 70 per cent in July of last year.

In seasonal terms, July's gaming revenues have historically lagged the mainland holiday months of May and October, but surpassed 'soft' months like June, September and November (see chart).

Union Gaming's Govertsen now expects Macau's casino revenue to approach US$33 billion this year, nearly six times greater than the US$6 billion in casino revenue he forecasts for the Las Vegas Strip.

Macau has continued to play a hot hand despite Beijing's efforts to rein in liquidity on the mainland. Policymakers have raised interest rates five times since last October, and have raised the amount of cash that banks must keep on reserve nine times.

This has yet to affect Macau, despite the city's reliance on mainland gamblers and the sensitivity to liquidity trends of its gaming industry.

The reliance on high rollers continues. Macau's 34 casinos booked a record 74 per cent of their gambling revenue from the VIP segment in the second quarter, more than at any time since regulators began releasing quarterly data in 2005.