Wire ASIA & OCEANIA
Macau's Casino Share Price Plunge
Shares in Macau's casino operators have lost a third of their value, plummeting by $14bn, due to investor fears over a government consultation.
“We will not be surprised if the market focuses only on the potentially negative implications, given the weak investor sentiment.”
MACAU LAND-BASED
AUSTRALIA – Fresh from its rebrand to JAB to help the vaccination push in Australia, Tabcorp’s wagering brand, TAB, unveiled a new TV commercial focused on turning the lights back on at local venues.
Featuring several TAB venues, the campaign furthers the message that getting vaccinated means getting back to the “good things,” like visiting your local pub or club.
CHINA – The Macau casino sector is facing a series of shake-ups when the new concessions are approved, with the government looking at axing the sub concession model and cracking down on how casinos handle junkets.
Analysts believe the crackdown will see the size of the junket market in Macau shrink with a 'much smaller junket operation in Macau than in the past,' according to analysts at Sanford C. Bernstein. Analysts at Credit Suisse said: “During the daily operation, it is common that players will deposit certain money they win as deposit with the casino (direct VIP) and junkets.
“The regulation against such practice may not only shrink the working capital pool of the players, but also increase the transactional costs of the high end players as they would have to transfer money to Macau for gambling every time.
“Junkets have lacked proper oversight and regulation (although regulation has improved over the past five+ years), and a key area will be reigning in junket activities. Junket deposits have been a problem in the past (recall the Dore scandal, among others) and the government has been vocal about the need to reform this system.”
JP Morgan added that this could make it complicated for concessionaires to continue in the junket business as the potential downside/penalty could outweigh expected economic benefits.
AUSTRALIA – Tabcorp’s former General Counsel of Wagering & Media, Daniel Lovecek, one of Australia’s most highly regarded and experienced wagering experts, has announced he is joining former
colleague Julian Hoskins at specialist gambling advisory firm, Senet.
Dan and Julian are no strangers to each other having worked closely together at Tabcorp for almost 10 years, grappling with some of the industry’s most complex wagering and media issues. Directing and leading complex commercial and regulatory work for the largest wagering operator in the country.
P26 WIRE / PULSE / INSIGHT / REPORTS
Shares in Macau's casino operators have lost a third of their value, plummeting by $14bn, due to investor fears over a government consultation that could see tighter restrictions brought into effect. Wynn Macau fell by 34 per cent to a record low with a similar 28 per cent dip for Sands China. Macau’s secretary for economy and finance, Lei Wai Nong, confirmed there would be a 45-day consultation on the gambling sector including how many licences will be allowed in the forthcoming retendering, how long they will be for and whether tighter supervision will be introduced by the government.
While licence renewals have been expected for some time as the current ones expire next June, the move to tighten regulatory control took the industry by surprise. Besides appointing government representatives, the revisions also propose increasing local shareholdings of casino companies, without elaboration on how these moves will be enacted.
JP Morgan analyst, DS Kim, said: “We admit it’s only a ‘directional’ signal, while the level of actual regulation/execution still remains moot.”
Preferred operator status now official for MGM in Osaka
Japan
Te foregone conclusion that MGM Resorts and partner ORIX Corp are the preferred developers to build an Integrated Resort casino on the artificial island of Yumeshima in Osaka Bay has been made official by Osaka Prefecture and Osaka City.
Te consortium was the only option left for Osaka following the withdrawals of Genting Singapore, Galaxy Entertainment, Las Vegas Sands, Melco Resorts & Entertainment and Wynn Resorts. Tough whether the companies withdrew to save face before they were pushed is open to conjecture.
Te Osaka Prefecture IR Evaluation Committee gave MGM and ORIX a total score of
George Choi, an analyst at Citigroup in Hong Kong, added: “We will not be surprised if the market focuses only on the potentially negative implications, given the weak investor sentiment.”
Te consultation comes as Macau has struggled with a dearth of travellers because of coronavirus curbs since the start of 2020. While gambling revenues have picked up in recent months, they remain at less than half of 2019 monthly hauls.
Morgan Stanley analysts Praveen Choudary, Gareth Leung and Tomas Allen, commented on the falling stocks in Macau: “We are confident about pent-up demand, which should eventually drive future mass revenue to be higher than in 2019, based on China’s retail sales and Vegas gaming revenue, however we are concerned that the status quo (visitation at 25 per cent of pre-COVID level, GGR at 35 per cent and mass at 50 per cent) could continue for longer. With zero tolerance policy, lower efficacy for certain vaccinations and Delta variant, recovery could be months or years away.
788.5 points from a total of 1,000 under its RFP points system.
Te Prefecture stated: “Currently, the global expansion of the coronavirus pandemic is having a serious impact on socio-economic and tourism-related industries, but the proposal from the MGM/ORIX consortium shows a deep understanding of the purpose of this project.
“Looking ahead to post- corona, the realisation of a growth-type IR that makes use of the tourist attractions of Osaka/Kansai and the potential of industrial and cultural resources will become the engine of economic growth in Osaka/Kansai.
“Te urban brand of Osaka will become a new internationally competitive city brand. It is an ambitious proposal aimed at raising [Osaka] to the next level.”
China
Te latest outbreak of COVID-19 will put a huge dampener on Macau's Golden Week, set to run from October 1 to 7 with analysts predicting that half of the people who have booked their travel and accommodation will now be unable to make the trip. Credit Suisse analysts Kenneth Fong, Lok Kan Chan and Sardonna Fong said '40 to 50 per cent of players have cancelled their trip on concerns that the situation could drag on longer than expected and they may need to be quarantined upon return to China. In fact, we have heard that several players have faced mandatory quarantine on return to China from Macau over the past few days.”
JP Morgan’s DS Kim, Amanda Cheng and Livy Lyu said: “Te timing of these travel restrictions could hardly be worse, as the industry was preparing for solid pent-up demand for the upcoming Golden Week.”
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