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Chris Sieroty

Macau posts major revenue increases

10 July 2011

MACAU -- Gambling revenues in Macau posted a 52.4 percent increase in June from a year earlier, according to government statistics released Friday. The month-over-month revenue increase continues to be driven by the large gambling appetite of visitors from mainland China.

Macau gaming revenues last month were 20.79 billion patacas, or $2.59 billion, up from 13.64 billion patacas, or $1.69 billion, a year earlier, according to figures compiled by Macau's Gaming Inspection and Coordination Bureau.

The year-on-year growth rate in June was the highest so far this year, but the total revenue recorded fell short of the all-time high of 24.31 billion patacas, or $3 billion, reported for May.

Macau casinos, including properties operated by Las Vegas Sands Corp., Wynn Resorts Ltd. and MGM Resorts International, were bolstered in May by the holiday season and the strong opening of Galaxy Entertainment Group Ltd.'s new resort.

In the January-June period, Macau's gambling revenue rose 44.6 percent to about $15.6 billion, from a year earlier, following a 58 percent surge to $23.4 billion for the whole of 2010.

Most analysts remain bullish on Macau casino operators. The Chinese territory, about an hour from Hong Kong by ferry, has overtaken Las Vegas as the world's largest gambling market.

Those who analyze the glitzy enclave predict revenues for all of 2011 will grow by as much as 45 percent.

"We believe that casino revenues will continue to be strong in 2011 despite challenging comparisons, and should likely continue to benefit from the recent introduction of new supply to the market," said David Katz, an analyst with Jefferies & Co. Inc.

Katz said his forecasting approach has been more conservative given the concerns over the tempering of the Chinese economy, the new entrants into the market, and the challenging comparisons.

"Nonetheless, the market continues to defy these dynamics," he said.

Macquarie Capital Securities Limited analyst Gary Pinge's outlook was a bit more cautious.

"We think the jury is still out on whether China's monetary tightening is having an impact on junket liquidity and hence, Macau's gaming market," Pinge said.

He said the theme for Macau remains relatively simple for the next year as market share continues to shift away toward Cotai as more amenities are added there.