As Deutsche Bank’s Karen Tang reports, 1Q 2007 data shows concerns of a mass market slowdown are overblown
Official data confirmed earlier press reports that Macau gaming revenues grew 45% year-on-year in the first quarter of 2007. More importantly, mass market growth revived from 10% in the fourth quarter of 2006 to 32% in the first quarter of ’07 – the fastest rate of growth on record. This proves concerns about sluggish growth of this high-margin segment are overblown.
Wynn and Galaxy improving market share
According to a trade magazine, Wynn and Galaxy managed to grab a greater share of the market in the first quarter of 2007 despite the opening of SJM’s Grand Lisboa in February. The respective market shares by operator were 46% at SJM, 18% at Las Vegas Sands Corp, 21% at Galaxy Entertainment Group, 15% at Wynn, and 1% at Melco PBL Entertainment. Given Macau added 80% more tables to a total of 2,970 in the first quarter, average daily table win was diluted to a blended average of US$8,000 per table (VIP tables at US$27,000; mass tables at US$2,900).
Lotus Bridge opening should relieve bottleneck
Mass gaming revenue grew 32% year-on-year in the first quarter of 2007, outpacing the 23% year-to-date growth of visitor arrivals in February, suggesting the visitors are spending more in casinos. This might be explained by the shift in mix towards Chinese visitors (+37 basis points year-on-year). The infrastructure bottleneck could pose a risk to growth, though thankfully, the government appears committed to addressing the situation. The expanded immigration checkpoint at the Lotus Bridge in Cotai re-opened on May 1, in time for the Golden Week holiday (May 1-6). The re-opened checkpoint has a capacity for 26 million visitors, compared to the 13 million arrivals that came through the Peninsula border last year.
VIP segment buoyed by Chinese stock markets
VIP revenue remained strong, +50% year-on- year in the first quarter of 2007 as the Shanghai Index reached an all-time high (+19% quarter-on-quarter in 1Q ‘07). Growth in the under-penetrated slots segment remained explosive (+72% year-on-year) in this segment.
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