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Howard Stutz

Macau gaming revenues climb 5.5 percent in August

5 September 2012

Gaming revenues in Macau jumped 5.5 percent in August, the second straight month the Chinese gambling market has experienced a single-digit revenue increase.

Macau gaming authorities said casinos collected $3.3 billion from gamblers during the month, the second highest ever recorded for a single month .

In October 2011, Macau gaming revenues hit $3.36 billion.

"This was in line with recent Wall Street expectations of mid- to high single-digit growth," Union Gaming Group principal Grant Govertsen told investors.

Govertsen, who is based in Macau, said figures met projections despite a typhoon that disrupted ferry and airline service.

"This was the third consecutive month that a typhoon of Signal 8 or above has disrupted the region as compared to only one Signal 8 typhoon in 2011," Govertsen said.

In July, Macau gaming revenues grew just 1.5 percent, the lowest single month since July 2009. For the first eight months of 2012, gaming revenues in Macau have grown 15.2 percent over 2011.

Macau's casino revenues have typically grown in double digits on a monthly basis. In 2011, gaming figures jumped 42 percent to $33.5 billion, more than five times the amount earned on the Las Vegas Strip. Growth has slowed in 2012 along with the Chinese economy.

Analysts said the August figures eased some concern over the effect of China's slowdown on Macau.

"We find the results to be encouraging given the difficult year-over-year VIP comparisons," Deutsche Bank gaming analyst Carlo Santarelli told investors.

Las Vegas Sands Corp., Wynn Resorts, and MGM International operate casinos in Macau.

Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski told investors the Macau market is in a transitional phase in which the higher-margin mass market segment might soon outpace the VIP customer base.

Wieczynski said development of the $4.4 billion Sands Cotai Central, which opened its first phase in April, could attract more mass market customers thanks to improved infrastructure allowing for better accessibility for Mainland Chinese residents.

"Although VIP play drove the early stages of the Macau growth story too, we believe the mass market offers equally as impressive growth prospects," Wieczynski told investors. "The introduction of additional nongaming amenities and more varied hotel price point options allows operators to attract a more diverse pool of guests to the market, in turn serving as a stable and compelling long-term growth catalyst."