Macau gaming stocks plunge on VIP junket operator crackdown report
Macau gaming stocks plunged after a media report warned of an impending crackdown on VIP junket operators, but they were off their intra-day lows after analysts cast doubt on its credibility.
Beijing plans to launch late this month a clean-up of "triad-linked junket operators" who make a profit by bringing in mainland high-rollers to casinos in Macau and lending them money, a British newspaper reported, quoting unnamed law enforcement sources as saying.
The drive would involve police operations in at least seven large mainland cities and is part of an anti-corruption drive led by president-in-waiting Xi Jinping, The Times said.
Casino operators SJM Holdings, Galaxy Entertainment, MGM China, Sands China and Wynn Macau tumbled 5.2 per cent to 6.8 per cent yesterday. MGM China fell as much as 7.7 per cent but closed just 0.3 per cent lower.
"We have our reservations on the said article," said an Asian brokerage analyst. "We do not believe this is an industry-wide crackdown, but rather one targeting off-casino side-betting junkets that are triad-linked and flouted the laws by engaging in … money-laundering."
When news broke in December that junket operators with ties to disgraced political leader Bo Xilai were detained by police, gaming shares were sold heavily. However, December was the highest grossing month for the industry, the analyst pointed out.
Union Gaming Research analysts said the crackdown "does not make sense" since it is unlikely such measures would take place before the annual meetings of the National People's Congress and the Chinese People's Political Consultative Conference due to begin early March.
Meanwhile, Melco Crown Entertainment reported net profit rose 0.4 per cent to US$107.98 million for the three months to December 31. Turnover rose 9 per cent to US$1.1 billion.
Shares of Melco fell 4.99 per cent to HK$51.40 yesterday.
Nagacorp, owner of the largest gaming and entertainment hotel in Cambodia, said net profit jumped 23 per cent to US$113.1 million for the year to December on US$278.8 million turnover. A final dividend of 18.06 HK cents will be proposed.
Additional reporting by Sandy Li