MACAU BUSINESS
upturns in demand, profits and cash-flows, which in turn should drive sustainable earnings upgrades and allow investors to enjoy predictable returns,’ the J.P. Morgan analysts wrote. HSBC Holdings Plc. analyst Charlene Liu also
noted there is “genuine and sustained” VIP demand as rooms for those premium players re- opened for the first time in two years and the availability of credit increased. That comes as the Chinese government announced this week a 10 per cent tax on luxury cars in a bid to combat conspicuous consumption and promote more fuel efficient vehicles.
Casino shares up
Macau casino shares gained after the release, with SJM Holdings Ltd. advancing as much as 4.1 per cent, while Sands China Ltd. increased 2.8 per cent in Hong Kong in trading on Thursday. The Bloomberg Intelligence Macau Gaming Index rose by as much as 2.5 per cent. Lawrence Ho, Melco Crown Chairman and Chief
Executive Officer, said the industry is experiencing a healthy rebound. “We’re in a recovery. That recovery is not going to be the same as the recovery during the global financial crisis,” Mr. Ho said in a recent interview. “It’s going to be more of a natural recovery.”
Despite positive signs of a rebound, the city’s
government floated a conservative forecast for gambling revenue next year, keeping it unchanged from 2016 at MOP200 billion. That is 13 per cent below analysts’ estimates. The government has pushed operators such as Las Vegas Sands and Galaxy Entertainment Group Ltd. to focus on tourists instead of the high rollers the industry has relied upon in previous years.
Maintain upward trend Gross gaming revenue for Macau casinos is
expected to be flat to up 10 per cent next year, versus an estimated 3-6 per cent drop this year and a sharp drop of 34 per cent in 2015, said Sophie Lin, a credit analyst at S&P global ratings. “The opening and ramping up of new casinos,
better infrastructure connecting Macau with Mainland China, and stabilising regulations are the major factors that will fuel a rebound in the gaming industry,” Ms. Lin added. Meanwhile, analysts at J.P. Morgan are now
projecting higher growth of between 7 per cent and 12 per cent for next year’s gaming revenue, up from the previous expected increase of 6 per cent to 9 per cent.
*with Bloomberg & Reuters
20 DECEMBER 2016
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