By Ray Poirier | Macau gaming observers were a bit perplexed last week when news from the Chinese enclave surprised everyone with reports of a huge increase in gambling revenues.
According to media sources, gaming during the month of August jumped an unexpected 44.2% to $1.2 billion.
With the Beijing Olympics and threats of travel restrictions for Chinese gamblers, analysts had expected a much smaller increase in August, some estimating that the increase over 2007 would not exceed 25%. Much of the improved performance was credited to the high-roller market.
So, with that good news, and based on prior monthly reports, gaming investors looked for shares of Las Vegas Sands Corp. (LVS), Wynn Resorts Ltd. (WYNN), MGM MIRAGE Inc. (MGM) to show some improvement. But, major improvement failed to materialize. In fact, the shares fell during a period when most major stock indexes also plummeted.
Las Vegas Sands, whose market share reportedly equaled Stanley Ho’s 18 casinos at about 25%, began the trading week at $47.41 per share and ended up on Friday at $42.66. Wynn Resorts was $95.42 on Monday but was only $89.17 by the Friday close. And, MGM MIRAGE began at $35.19 but ended at $32.62 per share.
In past months, a major increase in gambling revenues, as reported in August, would have inspired a lot more buying of gaming shares whose companies are involved in Macau.
Some analysts took the cautious view, saying that August might have been beneficial but September’s results might reflect the impact of fewer visits from the general population of China.
Las Vegas Sands market share improvement in August was followed by Wynn Resorts, which reportedly moved up to 17%, or third behind the leaders, and MGM MIRAGE’s 10%.