WYNN MACAU LISTING STARTS OFF SIZZLINGBased on Wynn Macau’s strong debut on the Hong Kong stock exchange last month it appears that investors may be returning to casino stocks.
The IPO, which raised more than US$1.6 billion, represents a 25 percent stake in Las Vegas gambling mogul Steve Wynn’s Macau operations.
It was Hong Kong’s second-biggest IPO of the year to date and the sixth-largest in the world.
“We have become more of a Chinese company, something that Mr. Wynn always wanted,” said Allan Zeman, a Hong Kong businessman and Wynn Macau director.
The shares closed at HK10.78 (US$1.38) on the first day of trading on October 9, up nearly 7 percent from the IPO price of HK10.08.
“For big-cap IPOs, its performance is pretty good,” Peter Pak, vice president at BOCI Research, told Reuters. “Its pricing is not cheap, but Macau’s gaming revenue has been rising and that helped boost confidence.”
All of which is good news for rival Las Vegas Sands, which was expected to take its Asian operations public before the end of the year, looking to raise up to $2 billion in a Hong Kong IPO.
Macau, the largest pure gambling market in the world, saw revenues from table games and slot machines contract during the first half of the year, falling 12 percent; but in July the peninsula’s six casino concessionaries reported year-on-year gains in revenue; and in August they were the highest on record as Beijing responded to the recession by easing up on travel restrictions imposed last year, making it easier for Chinese from the mainland to get to Macau and get there more often.
Gaming revenue was up 53 percent year-over-year in September, and J.P. Morgan Chase & Co, one of the underwriters of the Wynn IPO, said it expects October revenue to rise at least 32 percent to MOP 11.7 billion (US$1.52 billion).
Earnings at Wynn Resorts have fallen for the past two years in the wake of the recession and subsequent weakness in the Vegas market. In contrast, earnings from Macau rose 48 percent last year and contributed more than half of the company’s second-quarter revenue.
StarWorld shines, Galaxy back in the blackMacau casino operator Galaxy Entertainment Group soared to a profit of HK$1.06 billion in the first half (US$137.8 million) after a loss of HK$7.43 billion during the same period in 2008.
Group EBITDA was up 91 percent to HK$507 million despite a slight decline in total revenues to $5.33 billion from $5.40 billion.
EBITDA at the company’s flagship StarWorld casino was up 45 percent to $419 million. It was the fourth consecutive quarter of EBITDA growth for the property.
The bellwether of the group’s performance, StarWorld saw revenue jump 15 percent to HK$4.03 billion.
“Galaxy has accomplished an important milestone in shifting from a company which was initially focused on building a major business to one which is today delivering substantial profits,” said Chairman Che-woo Lui.
Rolling chip volume, a key indicator of VIP baccarat play, rose 13 percent from the first half of 2008 to $109 billion. VIP revenue for the six months was $3.4 billion, with a win rate of 3.1 percent. Mass-market drop was $2.9 billion, down 12 percent from the first six months of 2008, resulting in a 14 percent drop in revenue from $510 million to $440 million. Slot machine win was $63 million, compared with $69 million in the same period of 2008. However, the company noted that major renovation work had commenced in May on the mass-market gaming floor, and that disrupted operations until early August.
Sixteen additional VIP tables were opened at StarWorld in late June and six more were added in early July.
The company also runs four smaller CityClub casinos in Macau, and they contributed $84 million in revenue.
Galaxy was able to reduce debt by 30 percent during the period to $4.57 billion, and the group ended the first half with $5.4 billion in cash. Management also successfully implemented a $200 million cost-cutting program.
Meanwhile, the company said it was on schedule to complete the exterior of its new Galaxy Macau in Cotai by the end of the year. Late in 2008, the decision was made to slow down the development in the face of the deteriorating global economy.
Galaxy also has reached an agreement with the government on a long-term lease on a parcel of land totaling 1.7 million square meters of buildable space for an initial payment of HK$1.1 billion and $225 million payable in equal semiannual installments over the next four years. The lease runs 25 years.
TAIWAN FOCUS SHIFTS TO ISLANDS OF KINMENCasinos are dead in Penghu, but Taiwan may yet become a player in East Asia’s burgeoning gambling market.
Industry proponents from another group of islands, Kinmen, have applied for a vote on casinos in local elections next month, and the government there is also moving ahead with plans to draft laws by the end of the year to regulate casino operations.
The referendum application, submitted in August, had not been approved, however.
“The ball is now with Kinmen. But the earliest [that a decision would be taken] will be next year,” Liu Day-yang, a business analyst with the National Taiwan University of Science and Technology and an adviser to the government on its casino plans, told The Straits Times.
“It’s unlikely,” he said, “that they will discuss something so controversial before the elections.”
Kinmen is considered a good bet for a casino because of the proximity of its islands to mainland China.
Hopes had been high in Penghu as well after the central government passed a law earlier this year permitting casinos on the country’s outlying islands with local approval. However, supporters suffered an upset in September when 56 percent of Penghu’s voters, concerned about social problems and other possible negative impacts, gave the casino plan the thumbs down.
SINGAPORE TO DOUBLE CRUISE SHIP CAPACITYSingapore has began work on a US$353 million terminal that will double the city-state’s cruise berthing capacity and boost the number of tourists arriving by sea.
The terminal, located about five minutes from the downtown area, complements the nation’s plan to develop Marina Bay, where Las Vegas Sands is building a multibillion-dollar casino resort.
The 28,000-square-meter terminal, scheduled to be completed by the end of 2011, will increase cruise berthing capacity to four from two, said Margaret Teo, assistant chief executive officer for development at the Singapore Tourism Board.
The facility will be able to accommodate the world’s largest cruise ships.
Singapore wants to become the cruise hub for Asia, where more than half the world’s population resides and economies are starting to emerge from the global recession. The region accounts for about 7 percent of the world’s cruise market, according to the Tourism Board. Singapore received 920,000 cruise passengers last year, according to Bloomberg.
“Over the past three decades, global cruise arrivals have grown twice as fast as the world’s overall tourist arrivals,” Trade Minister Lim Hng Kiang said.
The Singapore Tourism Board, which expects to receive as many as 1.6 million cruise passengers by 2015, was looking for an operator for the terminal last month.
VISITATION HITS HIGH AT VENUES IN S. KOREADespite the global recession some 8.3 million South Koreans visited their country’s gambling facilities last year, a 16 percent increase over 2007.
The numbers were released in a report by the National Tax Service that was recently submitted to lawmakers.
The highest attendance numbers were recorded at racetracks, which drew more than 4 million visitors. Trailing closely behind was Kangwon Land, the only casino in the country that admits Koreans, with 2.9 million visitors. Cycling tracks drew more than 1.2 million.
The increase was not as great as in 2007, however, when visitation jumped 36.5 percent to more than 7.1 million from 5.2 million in 2006.
VIETNAM'S LOTTERY SET TO GO MOBILECanadian Pacific Lottery Corporation has received exclusive approval from the government of Vietnam to introduce proprietary mobile phone lottery technology in the country.
MobiLot, as the platform is known, will allow Vietnamese for the first time to play the state-authorized online lottery via their mobile phones, according to a report by Gaming Intelligence.
PLC was reported to be moving forward with the implementation and integration process in conjunction with the country’s state-owned mobile phone carriers, a process that was expected to take a few months.
Under the terms of PLC’s existing 10-year contract to supply the government with online lottery technology and services the company will receive 8 percent of all sales processed through the new mobile app.
Estimates cited by PLC indicate the country has as many as 40 million registered mobile phone users, and this is expected to grow to 55 million by next year.