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by Ray Chan


Bright prospects M


acau gaming stocks have started the year on a positive note, as investors bet on a good performance by the city’s casinos during the Lunar New Year holidays. There was a correction


in the last two days of January, as the first estimates of the month’s casino gross gaming revenue fell short of investors’ expectations. Eventually, that was not the case, with January’s revenue number ending towards the higher end of analyst estimates. This month kicks off the results season, which is expected to drive stock performance.


Results season has started, with good news coming from Sands China Ltd.


Morgan Stanley analyst Praveen Choudhary


says in a note to investors he expects Macau’s casino industry to report annual growth of 55 percent in earnings before interest, taxes, depreciation and amortisation (EBITDA) for the fourth quarter of last year, and quarterly growth of 12 percent.


Sands China Ltd. (1928.HK) reported its fourth


quarter results early this month, through its parent company, Las Vegas Sands Corp. (LVS.US). The Macau casino operator reported adjusted property EBITDA of US$430.1 million (MOP3.4 billion), 29.2 percent more than a year before. Its net profit rose by 43.8 percent to US$306.7 million. Also early this month, Wynn Macau Ltd. announced a profit of US$239.9 million for the last quarter of 2011, up by 15 percent year-on-year. Net revenues reached US$995.5 million, a 9.1 percent year-on-year increase. Adjusted property EBITDA in the fourth quarter of 2011 was US$313.1 million, up 5.5 percent from US$296.8 million in the fourth quarter of 2010. Mr Choudhary expects MGM China Holdings Ltd


(2282.HK) and Galaxy Entertainment Group Ltd. (0027.HK) to post double-digit quarterly growth in EBITDA for the fourth quarter. MGM China Holdings Ltd. will have the best growth rate, 29 percent, giving it EBITDA of HK$1.42 billion, Morgan Stanley estimates. Its estimate for Galaxy Entertainment Group Ltd. is HK$1.97 billion, an increase of 10 percent. Melco Crown Entertainment Ltd. (6883.HK, MPEL.US) is expected to post EBITDA of US$224 million, 7 percent less than in the third quarter but 68 percent more than a year before, according to Morgan Stanley.


22 MARCH 2012


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