Macau gaming in February 2012: important signs of market strength

Macau gaming results

Yesterday, the Macao Gaming Inspection and Coordination Bureau released its report of Gross Revenue from Games of Fortune for the SAR’s casinos during the month of February.  Results were:

* 1 HKD = 1.03MOP (Unit:MOP million )
Monthly Gross Revenue from Games of Fortune in 2012 and 2011
Monthly Gross Revenue Accumulated Gross Revenue
2012 2011 Variance 2012 2011 Variance
Jan 25,040 18,571 +34.8% 25,040 18,571 +34.8%
Feb 24,286 19,863 +22.3% 49,325 38,434 +28.3%

Source: Macau Gaming Inspection and Coordination Bureau

The monthly figures require a little interpretation, since the important New Year holiday, which prompts a surge in casino visits, fell in January this year vs. February in 2011.  Sure, bears were apparently saying, January looks good.  But that’s only because of the holiday.  Wait until you see how ugly February will be.

Now February is in.  Despite the difficult comparison, gambling revenue grew 22%+.  Looking year to date, and thereby avoiding the issue of the timing of the New Year holiday, the Macau market is growing at 28%+, almost 3x the rate the gloomier analysts in Hong Kong had been predicting.

stock market reaction

The biggest stock market beneficiaries of the Macau government announcement have been Wynn Resorts in the US and Wynn Macau in Hong Kong.  This, despite the uncertainty–and the negative publicity–stemming from the break between Steve Wynn and Kazuo Okada.

The market moves do make some sense.  1128 is the main source of WYNN’s profits, so what’s good for the subsidiary is good for the parent.  And the continuing rapid growth of Macau suggests for 1128 that:

–regulators may approve its application to build in new casino in Cotai more quickly, since possible oversupply of gambling space is less of a worry, and

–the clear appeal of rivals just-opened casinos–just to see them, if nothing else–won’t mean that 1128 will struggle to find customers of its own.


Earlier today, WYNN filed an 8k saying that it had, in effect, received Macau government approval for a proposed new casino to be built in Cotai.  WYNN almost immediately retracted the filing, saying only that it had been made in error.  The stock, which had risen about 7%, was suspended for almost two hours for dissemination of the retraction news.  It hit a new intraday high after reopening but is sagging a bit as I’m writing this.

My guess is that the retracted 8k will prove to be factually correct, but that WYNN’s agent jumped the gun on making the announcement.  If so, what’s most striking to me would be how quickly the approval would have come after Kazuo Okada was removed from the WYNN share register.  Of course, it’s also possible that the approval has been prompted by the absence of the market slowdown Deutsche Bank analysts have been predicting for some time.  It could be that the timing is just coincidence, but I’m not sure that’s the right way to roll.

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