December 2010 Macau gambling results

The Macau Gaming Inspection and Coordination Bureau announced December monthly and full-year 2010 revenue for the SAR’s casino industry on Monday.  The numbers are as follows:

* 1 HKD = 1.03MOP (Unit:MOP million )
Monthly Gross Revenue from Games of Fortune in 2009 and 2010
Monthly Gross Revenue Accumulated Gross Revenue
2010 2009 Variance 2010 2009 Variance
Jan 13,937 8,575 62.5% 13,937 8,575 62.5%
Feb 13,445 7,912 69.9% 27,383 16,488 66.1%
Mar 13,569 9,531 42.4% 40,951 26,019 57.4%
Apr 14,186 8,340 70.1% 55,137 34,359 60.5%
May 17,075 8,799 94.1% 72,211 43,158 67.3%
Jun 13,642 8,269 65.0% 85,853 51,427 66.9%
Jul 16,310 9,570 70.4% 102,163 60,997 67.5%
Aug 15,773 11,268 40.0% 117,935 72,265 63.2%
Sept 15,302 10,943 39.8% 133,237 83,208 60.1%
Oct 18,869 12,600 49.8% 152,106 95,808 58.8%
Nov 17,354 12,215 42.1% 169,460 108,022 56.9%
Dec 18,883 11,347 66.4% 188,343 119,369 57.8%
Source:  Macau Gaming Inspection and Coordination Bureau

The December figures represent an all-time high for revenues for the market.  They exceed the seasonal peak of October.  And they are much better than expected, especially so since the Chinese central bank is trying to cool down the mainland economy.

According to a local Macau magazine, Macau Business, a big beneficiary of the gaming surge has been Wynn Macau (1128), which it says has passed Sands China (1928) for second place in market share, with 17% of total market revenues. Presumably, the firm’s profits will benefit from substantial operating leverage.  Stanley Ho’s SJM (Sociedade de Jogos de Macau, 0880), the long-time incumbent, remains the market leader with a 30% share.

The magazine also maintains that MGM Macau has risen out of last place in the market, passing Galaxy Entertainment (0028) to do so.

This news appears to be the reason that the Hong Kong-listed market entrants have been strong this week, as well as their US-traded parents.

Two points to note:

–the quarter on quarter gain in market revenues from September to December is 16%.  For 1128, however, if it has gained one percent of market share for the quarter, its revenue stands to be up 24% quarter on quarter.  If it has gained two points, which I think is closer to being correct, the growth rate in revenues is 32%.  Even without factoring in operating leverage, which 1128 surely has, this means a blowout quarter.  If the Macau Business information is correct, the firm’s accountants will doubtless be hard at work devising ways to hold the earnings down–like increasing bad debt reserves.  But there’ll be no chance of 1128 not reporting a stunning number.

This is good for its parent, WYNN, as well–both because WYNN owns four-fifths of 1128 and it collects management fees based on 1128’s success.

–MGM is off my radar screen because of the company’s connection with the Ho family.  I did notice that both LVS and WYNN mentioned a not-yet-listed competitor (to my mind, clearly MGM Macau) that had begun to rent its casino space to junket operators in return for a very low fee.  Both LVS and WYNN speculated that this firm was trying to generate revenue growth in any way possible so that it could make an initial public offering.  And MGM has raised its market share from 7% to 11%, according to MB. There’s another possible explanation for MGM Macau’s behavior, though.  I only recently learned that, despite the fact that the government has not permitted casinos to add new tables for some time now, MGM has been unable to attract enough gamblers to use all the capacity it has permission for.  It may have feared that this unused capacity would be diverted to someone else if it weren’t put into operation.  Time will tell.


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