GGR fell 11.7 pct y-o-y Sands China leads casino stocks higher as revenue meets estimate

Mainland Chinese visitors to Macau rose 14 percent to 632,646 in the first five days of the week-long holidays this year

Sands China Ltd. led gains in Macau casino stocks as the world’s biggest gambling hub reported revenue that was in line with the government’s estimate.
Sands China Ltd. surged 7.1 percent to HK$42.95 in Hong Kong trading, Galaxy Entertainment Group Ltd. climbed 6.6 percent and MGM China Holdings Ltd. advanced 5.2 percent.
Total casino revenue fell 11.4 percent in September (11.7 percent year-on-year) to 25.6 billion patacas (USD3.2 billion), the fourth straight month it has declined. The figure, the biggest drop since June 2009, was expected to drop by 12 percent to 13 percent from a year earlier, as predicted last week by Secretary for Economy and Finance Francis Tam.
“You get the dynamic now whereas these gaming names have been so crushed that even a slight improvement is viewed positively,” Grant Govertsen at Union Gaming Group, said today. “You got a lot of investors who want to be in these names looking for an entry point.”
Wynn Macau Ltd. climbed 4.8 percent, SJM Holdings Ltd. advanced 5.5 percent and Melco Crown Entertainment Ltd. gained 3.6 percent.
Chinese President Xi Jinping’s crackdown on corruption has dented spending by high-stakes gamblers in Macau, the only place in China where casinos are legal. Pro-democracy demonstrations in Hong Kong may have caused mainland Chinese to defer their usual joint Hong Kong-
Macau trips, Govertsen wrote in a note yesterday.
“Mass market casino foot traffic – especially at the big- box casinos on Cotai – and certain instances of table games minimums, was lower than we expected,” he said. Casino companies have been opening resorts on the Cotai Strip.
About 20 percent to 25 percent of mainland travelers to Macau also go to Hong Kong on the same trip, said Karen Tang, an analyst at Deutsche Bank AG.
High rollers account for more than 60 percent of the city’s gaming revenue. The number of Chinese tourists normally rises during China’s annual week-
long National Day holidays that start on Oct. 1, one of the city’s busiest times of the year.
The political protests in Hong Kong “would put further pressure on VIP visitation,” said Govertsen, using the term that refers to high-stakes gamblers.
Still, “we acknowledge that this does not reconcile with the published Golden Week visitation data which has, so far, been universally robust,” Govertsen said.
Mainland Chinese visitors to Macau rose 14 percent to 632,646 in the first five days of the week-long holiday this year, according to data from Macau Government Tourist Office. That compared with an 11 percent growth for the same period a year earlier.
In Hong Kong, demonstrators are occupying shopping areas from Causeway Bay to Tsim Sha Tsui and Mong Kok, disrupting transportation, shutting stores and threatening to exacerbate Hong Kong’s slumping sales of jewelry, watches and other luxury goods.
Macau’s casino revenue in the third quarter to September fell 7.1 percent to 82.9 billion patacas, according to Macau’s Gaming Inspection and Coordination Bureau.
“Macau growth has decelerated sharply and will remain weak for the next few months,” Aaron Fischer, a Hong Kong-
based analyst at CLSA Ltd., wrote in a Sept. 25 note. “There will be some teething problems around the new smoking ban.”
Macau’s health agency in May announced that all casinos are required to implement smoking bans on their gaming floors starting Oct. 6. VIP rooms will be exempted from this ban.
Visa restrictions and Macau authorities’ crackdown on the use of UnionPay debit cards to transfer money from China also deterred high-rollers, CLSA’s Fischer wrote.
Macau’s government in July reduced the maximum number of days Chinese passport holders with transit visas can stay in the city to five from seven, in an attempt to prevent them from abusing the system. MDT/Bloomberg