IAG 2006-04-05 - Apr- May - page 14-15

Av. daPraiaGrande, No. 886, CentroCom. “Iat TengHou”
﹝南灣一定好商業中心﹞
, Macau. Tel: 715070
n this fifth trip toMacauover thepast 2 yearswe came across
dramaticallymore casinogaming supply in theMacaupipeline than
we anticipated. These projects are already in the ground with con-
structionor inadvancedplanning stages. Thenumbers areastound-
ing -wenowexpect therewillbenearly10,000 tablesand45,000slots
inMacauby 2010.This shouldbe great news for suppliers, including
ShuffleMaster (SHFL), InternationalGameTechnology (IGT) andWMS
Gaming (WMS),amongothers.
We remain positive on casino operators withMacau exposure –
LasVegasSands (LVS),WynnResorts (WYNN),andMGMMirage (MGM)
– but are incrementallymore concerned about the impact that this
level of supplymay have on returns for new projects and results of
existingcasinos in the short run.
Importantly, the combinationof the Individual Visitation Scheme
(IVS)andsignificanttransportation infrastructuredevelopmentshould
support casino supplygrowthof thismagnitudeover time. However,
wewouldn’t be surprised if therewere timing issues along theway
(i.e. someof the infrastructureneeded togrow visitationdoesn’t line
upperfectlywithsupplyadditions). Ultimately though,webelieve the
AsianFieldNotes
Prudential EquityGroup’s Senior Gaming and LodgingAnalystWilliam J. Lerner
recently visitedMacau, Singapore, and Tokyo in order to track the impact of new industry developments
onUS-listed casinooperators andgaming equipment suppliers.Mr. Lerner provided InsideAsianGaming
with field notes from his Asian gaming tripoutlining his updated thoughts on the region
better supply (i.e. LVS,WYNN,MGM) shouldproduce superior returns
over the long run.
UpdatedMacauGaming SupplyData
There are currently 19 proper casinos in Macau plus 6 Mocha slot
parlors, so 25 in all. We estimate the current gaming table installed
base at 1,757. We estimate there are currently 3,805 slot machines
and5,852hotel rooms.
Until our recent visit toMacauwebelieved therewereabout16 to
18 additional gaming projects in the pipeline through 2010. The ac-
tualnumber is38additionalproperties,includingnewbuildandmajor
expansions –many of whichwere not widely publicizedor well con-
cealed (Figure1). Figure2 shows the timeline for table, slot,andhotel
roomexpansion through2010,atwhich timeweestimate therewillbe
9,845gaming tables inMacau,45,445 slotmachines,and41,091hotel
rooms. This represents tablegrowthof 460%, slotmachinegrowthof
1,094%,andhotel roomexpansionby602%over thenext four years.
When gauging incremental risk for casino operators in Macau
wewould look at the table supply data. Whengaugingopportunity
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Casino Lisboa, Macau
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