Macau casinos still on a hot streak

PUBLISHED : Friday, 21 October, 2011, 12:00am
UPDATED : Friday, 21 October, 2011, 12:00am


Casino developer Steve Wynn says there are no signs yet that Macau's high-stakes gambling volumes are being hit by the broader economic slowdown in the region.

Concerns that Macau's VIP gaming segment would see slowing repayment of gambling debts or a pull back in lending by the junket agents who issue players credit and collect their debts have helped to trigger a massive sell-off in Macau stocks in recent months.

But so far, gaming volumes in the city continue to soar, rising 46 per cent in the first nine months to 194.35 billion patacas.

'We don't, at the present time, see any change,' Wynn said yesterday on a conference call.

Wynn, the chairman of Wynn Resorts and Wynn Macau, said core earnings at his 1,000-room, two-tower Macau casino resort rose to a fresh record during the 'golden week' holiday at the start of the month.

In the first 18 days of October, Wynn Macau's earnings rose about 30 per cent from a year earlier to US$73 million, putting the full month on track to again exceed US$100 million in earnings, Wynn said.

Shares in Wynn Macau are down 33 per cent from their near-term peak in early August, tracking the 23 to 46 per cent declines in Hong Kong-listed Macau casino counters over the same period. The Hang Seng Index, by comparison, is down 20.7 per cent since August 1.

Wynn said the May 15 opening of Galaxy Entertainment's HK$16.5 billion Cotai strip property had not affected profitability growth at Wynn Macau, despite the rival resort's fast inroads into the VIP market.

'I know that everybody's studying market shares since Galaxy opened,' Wynn said. 'But our bottom line keeps climbing.'

Wynn Macau's net quarterly profit rose 84 per cent from a year earlier to a record US$210 million, the company said in a stock exchange filing.

However, after adjusting for a one-off US$107 million charge related to a May charitable donation to the University of Macau, profit fell by around 7 per cent since last quarter.

Cash flow rose 50 per cent from a year ago, but fell 6 per cent from the second quarter to US$296 million. Revenue rose 42 per cent from a year earlier, but slipped 2.6 per cent from the prior quarter to US$951 million.

Wynn offered an interesting take on the Macau government's policy to cap the number of gaming tables at 5,500 until 2013. The city had 5,379 tables at the end of last month.

'If your interpretation ... is that the current table cap is going to apply to future hotels, then you've misunderstood,' he said. 'The current table cap has to do with the current tables.'