Over the Labor Day weekend, the Macau Gaming Inspection and coordination Bureau (DICJ) released its monthly report on the aggregate amount won by the casinos in the SAR during the month. Here are the figures:
* 1 HKD = 1.03MOP (Unit:MOP million )
|Monthly Gross Revenue||Accumulated Gross Revenue|
Source: Macau DICJ
The figures are obviously good. the MOP 30.7 billion achieved in August surpasses all but the win from last March, a holiday month. They’re 4% better than the results for July. They’re also up 17.6% year on year. August of last year may have been negatively affected both by weather and by high rollers beginning to pull in their horns as the anti- conspicuous consumption attitude of the new Communist Party leadership began to make itself known.
What’s most interesting–and encouraging–are company comments that VIP gamblers are beginning to return in higher numbers to Macau as they feel more comfortable about what the Party’s anti-corruption stance and dislike of lavish displays of wealth actually means for them. Apparently, gambling, in itself, isn’t a bad thing. In addition, the tide of merely affluent gamblers–who might gamble US$10,000 on a visit, rather than US$1 million–is continuing to rise strongly.
The real shortage element at present is casino and hotel capacity to receive customers. The biggest beneficiaries of market growth are those who are opening new space in Cotai. To my mind, this means Galaxy Entertainment and Sands China (I own shares of Galaxy and of Sands China’s parent, Las Vegas Sands. (Both Fidelity and Schwab maintain Americans aren’t permitted to buy Sands China in Hong Kong and refuse to transact in the name. I’ve asked LVS several times for an explanation–their investor relations people are clueless, however. I find that disturbing for a big company, but not to the degree that I want to sell LVS.)
One’s instinct in any attractive market is to look for laggards–companies that may not be the best-positioned, but which are significantly cheaper than the leaders. Buy them, wait for a run and trade into the leaders, the strategy goes. In theory this sounds good. And Hong Kongers have no trouble executing it among the Macau gambling stocks. As for me, some of the laggards are controlled by people I don’t trust. So I’d rather stick with the names I have (I also own Wynn Macau and WYNN).