Analysts differ on opinions of Macau and Las Vegas future

Aug 20, 2012 6:35 PM

Gaming analysts and industry observers have developed different opinions on the future of gaming both in Las Vegas and Macau.

Five Star Equities, a group that provides market research focused on equities that offer growth opportunities, value and strong potential return, suggested last week the casino industry is facing a slowdown in gaming revenues both in Las Vegas and in Macau.

The review noted that despite a strong start at the beginning of the calendar year growth in Macau and in Las Vegas has slowed, based on reports filed during the most recent quarter.

Quoted was Grant Govertsen, an analyst for Union Gaming based in Macau. He said he believes gaming revenues in Macau will be in the low-single-digit area in August but will bounce back to double digits in September.

As for Las Vegas, Five Star Equities pointed to the June revenue report from the Nevada Gaming Control Board that saw a 4.5 percent decline. This marked the third consecutive decline in slot volume on the Las Vegas Strip, said a spokesman.

Yet, during the past few trading days, share prices of casino companies doing business in Macau have been rising.

On Monday, in a note to investors, Nomura Securities wrote that gaming revenues on the Chinese island appear to have jumped 6 to 11 percent since the beginning of the month. These figures, said Nomura, far exceeded previous projections. Also, it was noted the city’s gambling houses have been loaded with customers.

The projections were underscored by analysts at the firm of Sterne Agee. They wrote to investors that gross gaming revenue in Macau is poised to rise 9 percent year-over-year in August. Also, the results will set a gambling record for the Chinese enclave.

These comments followed last week’s report that despite fears of a slowdown in the Chinese economy, Chinese Premier Wen Jiabao was quoted as saying the country should still meet the growth targets it had set. He added that inflation had been slowing, opening the door to the possibility of more monetary stimulus.

But from another corner, there were words of caution. Robin Farley of UBS Securities revised her estimates of Macau’s growth in 2013 to 7 percent from the previous 13 percent. She said she expected fewer VIP visitors to the major casinos. These VIP visitors are the high-rollers.

As for the mass market visitors, she said, she saw no reduction from the 18 percent increase she had previously predicted.