stocK Watch 65
Macquarie
roller gamblers.
believe
Bank of America analysts
lowered their target price to
that in the US$4.50 from US$ 5.00 and
longer-term,
explained that ‘’the company
MGM should
also announced a US$25 mil-
lion cost cutting initiative to
benefit
get Crown Macau’s costs more
from the
in-line with current business
levels - this should be imple-
increased
mented by December - and the
critical
return of Ted Chan, formerly
mass of its
CEO of Amax Holdings, as
President of Crown Macau’’.
location Galaxy Entertainment
once encore
Group (HKSE:0027), which
at Wynn, Arc
published unaudited results
in late November, received a
De Triomphe
“sell’’ recommendation from
- completion
Citigroup analyst George
Choi, who believes that “with
early 2009
the Macau gaming market fac-
- and One
ing significant negative macro
Central open
trends, Galaxy could face more
pressure on its market share
due to its weak product’’.
The company said it had
a decrease in revenues in the
third quarter, compared to the
previous quarter as a result of
increasing competition in the
Macau gaming market.
“In our view, Galaxy
through some of its dry MGM citing concerns about On November 20, Ne- will lose market share when
powder’’. its ability to refinance US$1.28 vada gaming regulators gave MPEL’s City of Dreams opens,
billion in debt as well as fund approval for investment firm which would be exacerbated by
Modest progress new construction. Dubai World to acquire a big- a potential delay in the open-
For the Macquarie gaming ger stake in MGM, a move the ing of Galaxy World,’’ added
In late October MGM analysts, MGM Grand Macau casino company said will help the Citigroup analyst in a note.
Mirage (NYSE:MGM) sus- “continues to make some mod- it survive a “paralyzed” global Stanley Ho Hung-sun’s
pended some projects due to est positive progress, as new economy. The plan approved SJM (HKSE: 0880) - which
a steep fall in the third quar- management led by former by the Nevada Gaming Com- was the best perfor ming among
ter results - net income fell Wynn Macau general man- mission authorizes the invest- the six listed Macau Casino
67 percent. In November, it ager Grant Bowie is starting ing arm of the Dubai govern- operators - received a “sell’’
announced the retirement of to work on its new operating ment to increase its current recommendation from George
chief executive officer Terry plan’’. They explain that “man- 9.4 percent stake to as much Choi, analyst from Citigroup.
Lanni - to be replaced by Jim agement has recently brought as 20 percent of the gambling Choi said in a note he believe
Murren - and closed a previ- in a new local and regional company, Associated Press re- SJM’s cost-cutting strategies
ously announced $750M sen- marketing team and will start ported. could hurt its product qual-
ior secured note transaction. rolling out its more aggressive ity and quicken the pace of its
Analyst Shaun Kelley, customer acquisition programs Macau-based operators market share loss.
from Bank of America, said in coming months’’. The Citigroup analyst also
in a note sent to Macau Busi- The analysts added that M e l c o C r o w n ( N A S D A Q : said: “In our view, given how
ness “we (the analysts’ team) they believe in the longer-term, MPEL), a casino venture be- little SJM is spending on Ponte
remain cautious on MGM, as MGM should benefit from the tween Australian billionaire 16, L’Hermitage and Oceanus,
they have the steepest matu- increased critical mass of its James Packer and Lawrence we believe SJM will lose mar-
rity curve in our coverage uni- location once Encore at Wynn, Ho, also announced three ket share before its best prod-
verse’’. Arc De Triomphe - completion months results and said its uct, the redeveloped Casino
At the same time, Fitch early 2009 - and One Central third-quarter loss narrowed Lisboa, becomes operational
Ratings cut its credit rating on open. on more business from high- five years from now’’.
december 2008
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