Everyone has now gone over to the lvs.freeforums. net board. I find lots of great LVS articles and discussions over there which I don't find anywhere else. Thanks for the Japan article as well.
Sentiment: Strong Buy
BofAML sees Macau gaming revenue doubles in next 5 years
Ng Hei Ling, Bank of America Merrill Lynch researcher in charge of gaming and hotel industry in Asia, projected the gaming revenue of Macau will surge by 2x within next 5 years, thanks to serious imbalance between supply and demand in China and Asian countries, plus economic growth in the PRC, optimising infrastructure in Macau and development in Hengqin. The bank estimated the annual gaming revenue of Macau will jump 18% yearly to MOP357 billion in 2013.
BofAML positive on Macau gaming stocks despite recent correction
Some Macau gaming stocks have recently receded 10-20%, but Bank of America Merrill Lynch's head of global research in Asian gaming and hotel said it was just normal correction as the stocks have cumulatively soared 50-60% over the past few months.
The broker believed Macau gaming revenue will grow by at least 15% in 2014 with better visibility than other sectors, adding it remains bullish on Macau casino stocks.
Sentiment: Strong Buy
Gaming revenue on track to grow 20 pct this month
Table-only gross gaming revenue was MOP16 billion (US$2 billion) in the first 17 days of this month, Sterne Agee says.
The brokerage firm said yesterday this month’s run-rate for gross gaming revenue, including slot machines, indicated full-month takings of MOP29.3 billion, 18 percent more than a year earlier.
Sterne Agee’s revenue forecast for this month is unchanged at MOP29.8 billion, a 20-percent increase over the same time last year.
Sentiment: Strong Buy
New Cotai casinos will boost slot machine demand
Up to 7,000 gaming machines could be installed in casinos each year until 2017 to meet demand, our sister publication Business Daily reports.
Research by the Macau Polytechnic Institute predicts the new casinos opening in Cotai between 2015 and 2018 will need up to 10,000 new machines.
But about 20 percent of old machines are replaced each year, bringing annual demand up to about 7,000 machines.
The report’s author, associate professor Zeng Zhonglu, told the newspaper there was “great potential” for new machine installations.
Sentiment: Strong Buy
This article seems confusing to me. Anyway shows how a govt can live within its means by spending less than they take in.
Govt cautious on 2014 special gaming tax takings
The government expects revenue of MOP115.5 billion (US$14.4 billion) from the special gaming tax next year, according to its proposed budget for 2014.
The sum is 25 percent more than budgeted for this year.
The government levies the special gaming tax on casino gross gaming revenue at the rate of 35 percent.
The government tends to make conservative predictions about the growth of the gaming industry.
Its revenue from the special gaming tax this year will probably be greater than the amount it expects to get next year.
The proposed budget for next year envisages total revenue of MOP153.6 billion, 14 percent more than budgeted for this year, and spending of MOP77.6 billion, 6 percent less.
Sentiment: Strong Buy
Spok, appears you are correct on the mall location so I would suspect this mall would not be included in the Parisian budget. I remember hearing if it has been approved or not yet though.
There is a picture of this Tropical Garden mall location etc on slide #18 from the LVS earnings call. It looks like there might be two parts to it? A second Tropical garden is shown on the slides between the Parisian and the Four Seasons.
Sands has applied to the Macau government to create a new two million square foot shopping mall called Tropical Garden, just south of Sands Cotai Central, on the east side of The Cotai Strip.
“The mall will feature over 900,000 square feet of value-oriented destination shopping and dining, targeted specifically at the mass market visitors to Macau,” stated Mr Adelson.
P.S. Be sure to look at all the slides from the presentation. Appears to be a lot of good info especially in the later slides regarding rail expansion, border gate expansion, Hengquin, etc etc.
Sentiment: Strong Buy
I agree as well. Any new projects will most likely be under the LVS business. Anything Sands China does will most likely be in Macau.
I noticed in the August Sands China report (the newest one available) it said they had US$1.64 Billion in cash on hand but also included the statement:
"We may need to arrange additional fi nancing to fund the balance of our Cotai Strip developments."
In Macau I am not all sure what they have planned to build beyond the Parisian, St Regis, and another mall they talked about earlier this year but that mall might be considered part of the Parisian project.
Below is from the Capital expenditure plans listed in the August Report:
It appears they need $3.15 Billion to complete the 2 projects however they have $1.64 Billion on hand meaning they would need about $1.5 Billion more. Sands China does however generate a significant amount of cash so I am not even sure the entire $1.5 Billion will be needed unless they also have other plans. I suppose it is smart to have enough credit lined up though "just in case."
Cotai Strip development. Phase III of the project is expected to include a fourth luxury St. Regis-branded hotel and mixed-use tower. The total cost to complete phase III is expected to be approximately US$450 Million.
We have commenced construction activities on The Parisian Macao, our integrated resort development on Parcel 3, and have capitalized costs of US$222.6 million, including land, as at June 30, 2013. We have received the requisite government approvals to start construction of The Parisian Macao and have begun on-site work. We expect the cost to design, develop and construct The Parisian Macao will be approximately US$2.7 billion, inclusive of land premium payments.
These investment plans are preliminary and subject to change based upon the execution of our business plan, the progress of our capital projects, market conditions and the outlook on future business conditions.
Sentiment: Strong Buy
Guangdong-Macau new border entry channel approved
Vice premier Wang Yang met with Macau SAR's chief executive Fernando Chui yesterday and announced that the Guangdong-Macau new border-crossing channel project has been approved by the central government.
The core of the new project lies in the border-crossing model. Besides, 24-hour entry clearance was also included in the project.
High revenues but no records forecast to end 2013
Union Gaming Research Macau forecasts that Macau casinos will have MOP31 billion (US$3.9 billion) to MOP32 billion in gross gaming revenue a month in November and December.
The consultancy says growth will be driven by across-the-board strength in all the main segments.
It says gross gaming revenue this year will be about MOP360 billion, about 18 percent more than last year.
This suggests Macau’s gross gaming revenue will be seven times the Las Vegas Strip’s revenue this year, which is forecast to be MOP51.2 billion.
Sands Market share for Oct ended at 20%. I don't see the results for MPEL, WYNN, or MGM here. If anyone comes across this data please post it here. Thanks.
SJM expands share of gaming market last month
SJM Holdings Ltd extended its lead in the gaming market last month, according to data compiled by our sister publication Business Daily.
SJM Holdings had 26 percent of gross gaming revenue, one percentage point more than in September.
Last month was the second month in a row that SJM Holdings increased its market share.
Galaxy Entertainment Group Ltd climbed to second spot in the market share table, with 21 percent, having had 19 percent in September.
Sands China Ltd fell to third place after its share shrank by two percentage points to 20 percent.
Growth in casino revenue per visitor slowing
Growth in gaming revenue per visitor is slowing as casinos switch their focus to mainland mass-market gaming from VIP gaming, Bloomberg reports.
The news agency quotes Bloomberg Industries analyst Tim Craighead as saying more mainlanders from places further away than the neighbouring province of Guangdong are visiting Macau.
Mr Craighead also says a surge of 67 percent in attendance at conferences in Macau is helping casinos.
‘Table count’ expands ahead of table cap
Michael Grimes | 29/10/2013 | in
Count in first nine months expanded 5 pct y-o-y suggests research note – govt allows for 3 pct compound growth annually
Investment bank Morgan Stanley estimates that “table count’ in Macau’s casinos rose five percent year-on-year in the nine months to September 30.
“According to our calculations, table count rose by eight percent/five percent in 2012/9M13, respectively, and the number of four- and five-star hotel rooms rose by 17 percent/13 percent in Macau,” says the report from the bank’s managing director Praveen Choudhary in Hong Kong.
The bank uses the data to illustrate the point that there are limited catalysts currently to support boosting further the valuations of some Macau gaming stocks. It says that’s because from now until mid-2015, Macau may not see any new table and hotel additions from the six key operators, thus affecting overall revenue growth.
The bank draws no conclusions about why table count may have risen five percent in the first nine months this year.
It’s on public record that new allocation of live dealer tables – the product preferred by Chinese gamblers visiting the city – is subject to a market-wide cap equivalent to only three percent compound growth annually until 2022, from a baseline of approximately 5,500 tables recorded by the local regulator in the fourth quarter of 2012.
What then would account for the difference? One possibility is the method used to do the two counts. “Table count” is not necessarily the same thing as ‘table allocation’ from the government. The number of tables in the possession of an operator could be greater or fewer than the number of tables recorded as its official ‘allocation’.
Additionally, the number of tables any observer can physically count on the floor isn’t necessarily what the operator actually possesses. Some could be in storage or be being used for training.
It’s also on public record that operators are allowed to shift tables – including some previously in mothballs – within properties and from site-to-site in order to improve yield per table as demand has risen.
Eleven days ago Sands China Ltd chairman Sheldon Adelson said on an earnings call that his firm – in common with other operators – would “take the lower-performing tables from other properties” to improve yields.
Another potential reason for the discrepancy between ‘table count’ this year and the expansion permissible under the cap is possible government flexibility on that table cap policy.
There have been repeated signals – some specifically to Business Daily, others reportedly to equity analysts covering the city’s gaming sector, and via at least one public statement by a senior member of the government – that some leeway is possible on the cap.
The first route is via the government allocating new tables on a project demand basis – issuing more in some years and fewer in others – so that the average compound growth over the decade is equivalent to three percent per annum.
The second is for the government to ‘reward’ operators that co-operate in building non-gaming infrastructure by issuing table allocation above cap limits. The latter would potentially benefit the whole industry by broadening the base from which future compound growth is calculated.
In addition, Macau Legend Development Ltd, a company operating casinos via the licence of Sociedade de Jogos de Macau SA under a so-called ‘service agreement’ said recently the 350 new-to-market tables it asked for last year are “outside” the table cap. If that’s also the government’s view, the addition of such tables to the base will itself change the compounding calculations for the cap.
It’s not clear whether discretionary awards of tables to any or all of the six main operators – if adopted as a policy – would be subject to an announcement in the Official Gazette and therefore be open to public scrutiny.
“The government has the room to assign further tables to recently-opened casino-resorts where large investment is made and which fit its non-gaming development focus,” said Francis Tam Pak Yuen, Secretary for Economy and Finance, in January.
A source with knowledge of the situation told Business Daily in July 2012 that the policy of three percent per year compound growth from 2013, first announced by Mr Tam in March 2010, could be applied on an industry needs basis not purely incrementally.
A report issued on October 15 by analyst Philip Tulk of Standard Chartered bank in Hong Kong suggested the cap was to be raised to four percent annual compound expansion.
The following day, Macau’s casino regulator the Gaming Inspection and Coordination Bureau told Business Daily by e-mail that the government “does not have any plan” to relax the cap on live dealer casino table numbers.
Mr Tulk’s analysis assumed a baseline of 5,485 live dealer tables that were recorded in the market by the bureau at the end of the fourth quarter, and excluded the table requirements of what he describes as “the upstarts Macau Legend and Louis XIII”, the latter a reference to a boutique casino planned for the Cotai-Coloane border. Mr Tulk concluded that four percent expansion annually on a compounded basis, would deliver 2,800 new-to-market tables between now and the end of 2022, the year when the last of Macau’s six current casino concessions and sub-concessions are due to expire.
Business Daily has calculated that based on previous regulatory announcements on tables sought for new projects – including Macau Legend and Louis XIII Holdings Ltd – the territory would need at least 3,421 new tables between now and 2022.
Yet more ‘service agreements’ are coming to light. Last week this newspaper reported there are plans for a casino at a proposed new Taipa hotel called The Hollywood Roosevelt Macau, on land next to Macau Jockey Club.
Gaming revenue record guaranteed, say analysts
Analysts have forecast gross gaming revenue to exceed MOP35 billion (US$4.4 billion) this month and set a new monthly record.
Sterne Agee analyst David Bain said this month’s revenue would be about 15 percent higher that the current MOP31.4-billion record set in March.
The brokerage said this month’s gross gaming revenue would reach MOP35.9 billion, a 29-percent increase over the same time last year.
RBC Capital Market says October’s gross gaming revenue may reach MOP36 billion, a 30-percent increase in year-on-year terms. Its revenue estimate for the first 27 days of the month was MOP32.6 billion.
Wells Fargo said gaming revenue was about 30 percent higher than at the same time last year.
A source from SJM Holdings Ltd told the Lusa news agency that revenue could reach MOP37 billion this month.
Morgan Stanley likes casino stocks in medium term
Morgan Stanley says Macau casino stocks will continue to provide good returns to investors – at least in the medium term.
The investment bank says in a note to investors that consensus casino revenue forecasts for next year are not very high.
It suggests that casino stocks should see forward earnings before interest, tax, depreciation and amortisation of 16 times price.
But there is increasing uncertainty for casino stocks in the longer term. It says the lack of new casinos in the next two years, the limit on live gaming tables, uncertainty about the renewal of the licences of the six casino operators and the shift to mass-market gaming may affect earnings.
Fashion the focus for Sands Shoppes at Parisian
Big fashion labels and ready-to-wear upstarts from France will fill the Shoppes in Parisian Macao when it opens in late 2015.
Announcing the start of the search for tenants last Friday, officials of Sands China Ltd said the shopping mall would recreate famous shopping districts in Paris, such as the Avenue des Champs-Elysees.
Sands China senior vice-president of retail development David Sylvester (pictured) said the shops would appeal to Chinese customers who “clearly have a love affair with Paris”.
The mall will have over 10 restaurants and 130 boutiques.
The shops are part of Parisian casino resort and will connect to shopping areas in the Four Seasons Macau, Venetian Macao and Sands Cotai Central.
Sentiment: Strong Buy
An earthquake of magnitude 7.3 struck early Saturday off Japan's east coast, the U.S. Geological Survey said, and Japan's emergency agencies issued a tsunami advisory for the region that includes the crippled Fukushima nuclear site.
Tsunamis of up to 15 inches were reported at four areas along the coast, but the advisory was lifted less than two hours after the quake.
There were no immediate reports of damage on land. Japanese television images of harbors showed calm waters. The quake hit at 2:10 a.m. Tokyo time about 170 miles off Fukushima, and it was felt in Tokyo, some 300 miles away.
"It was fairly big, and rattled quite a bit, but nothing fell to the floor or broke. We've had quakes of this magnitude before," Satoshi Mizuno, an official with the Fukushima prefectural government's disaster management department, told The Associated Press by phone. "Luckily, the quake's center was very far off the coast."
Mizuno said the operator of the troubled Fukushima Dai-ichi nuclear plant, Tokyo Electric Power Co., said no damage or abnormalities have been found so far. The plant was severely damaged in a 2011 earthquake and tsunami and has been shaken by a series of more minor tremors since then.
Mizuno also confirmed that several plant workers near the coast preparing for a typhoon were ordered to evacuate to higher ground.
Japan's meteorological agency issued a 3-foot tsunami advisory for a long stretch of Japan's northeastern coast, and it put the quake's magnitude at 7.1. The U.S. Pacific Tsunami Warning Center did not post warnings for the rest of the Pacific.
The agency reported tsunamis of 40 centimeters in Kuji city in Iwate prefecture and Soma city in Fukushima, as well as a 20-centimeter tsunami at Ofunato city in Iwate prefecture and a 30-centimeter tsunami at Ishinomaki in Miyagi prefecture.
All but two of Japan's 50 nuclear reactors have been offline since a March 2011 magnitude-9.0 earthquake and ensuing tsunami triggered multiple meltdowns and massive radiation leaks at the Fukushima plant, about 160 miles northeast of Tokyo. About 19,000 people were killed in the disaster.
A string of mishaps this year at the Fukushima plant has raised international concerns about the operator's ability to tackle the continuing crisis.
Worried Japanese regulators met with Tokyo Electric officials this week to discuss how to prepare for a typhoon that could dump heavy rain on Fukushima on Saturday. And Nuclear Regulation Authority Chairman Shinichi Tanaka has scheduled a Monday meeting with Tokyo Electric's president to seek solutions to what he says appear to be fundamental problems.
It doesn't appear to be as bad you are predicting.
A magnitude 7.3 earthquake struck off the Fukushima region of Japan, according to the U.S. Geological Service.
The epicenter was located 295 miles east northeast of Tokyo and 231 miles east of Japan's Honshu Island.
The Japan Meteorological Agency issued a tsunami warning at 1:14 p.m. EST for Fukushima Prefecture.
"Marine threat is in place," the agency warns. "Get out of the water and leave the coast immediately."
The agency said it expects a slight sea level change in coastal regions, but no tsunami damage.
NOAA's Pacific Tsunami Warning Center said the quake was not expected to trigger a Pacific-wide tsunami and that there was no threat to Hawaii.
Japanese Politicians Start Casino Legalization Effort, Where Las Vegas Sands (LVS) Could Be Winner
Politicians in Japan have drafted legislation that would allow casinos to operate in the country, and they could open just before the Tokyo 2020 Olympic Games, reports Bloomberg.
A formal bill could be introduced in parliament before the end of the year in the Diet session, which ends Dec. 6, 2013, according to a Thursday research note from Swiss bank UBS AG (VTX:UBSN).
One important discovery is that casinos could be allowed to operate in both rural and urban areas, whereas before some thought they’d only receive city licenses. The draft document didn’t specify where casinos might be built, though Tokyo and Osaka have been floated as options in the past.
Japanese Chief Cabinet Secretary Yoshihide Suga told reporters in Tokyo, “There are great hopes as regards casinos from the point of view of building up tourism.”
UBS analysts called the recent Tokyo pick a “positive catalyst,” writing that Japan’s gambling market could be modelled after nearby Singapore.
Citigroup (NYSE:C) casino analysts earlier pegged Japan’s gambling market as worth a potential $15 billion in annual revenues, twice Las Vegas’ revenues and second in the world only to Macau. Major casino players who could eventually benefit include Las Vegas Sands Corp. (NYSE:LVS), Wynn Resorts, Limited (NASDAQ:WYNN) and MGM Resorts International (NYSE:MGM).
UBS and Citigroup both gave Las Vegas Sands the best odds to open Japan's first casinos. The company’s recent solid financials and strong Asian track record in Macau and Singapore give it the edge, they said. UBS upped its stock price target last week to $78 from $68 after strong third-quarter earnings.
There may be no rush among investors or markets just yet, since it will probably be 2018 before the first casinos open. Gaming companies like Sega Sammy Holdings Inc. (TYO:6460) are also likely to benefit.
Sentiment: Strong Buy