IAG 2006-06-07 Jun-Jul - page 16-17

16
irst quarter gaming revenue growth
was in line with recent year to date trends
(of around 17% year-on-year) and support-
ed by higher tourist arrivals. The growth is
driven almost entirely by the mass market
(+44%), with only the VIP segment being
stable (+3%). Since 2006 looks to be a back-
end-loaded year, full year growthmay actu-
ally exceed our expectations if the recent
monthly growth rate continues for the next
fewmonths. We are confident that the Las
Vegas experienceof supply-creates-demand
will be repeated inMacau.
BulletinResearch
New openings after 18months
Aside from February (whichwas distortedby
the shift in Chinese NewYear timing),March
saw the highest y-o-y growth over the past
six months.We think this is because Macau
finally sawmore casinos opening in 1Q06 af-
ter a quiet 18months.During 1Q06, two new
casinos (theSJM-runEmperorandGalaxy-run
Rio) and a large-scale tourist attraction (SJM’s
Fisherman’sWharf)opened theirdoors.
Tablewin diluted
With two new casinos and expansion at
Sands,Macau added 422 tables to a total of
1,650 over the twelvemonths to the end of
1Q06.With this 34% increase in table supply,
averagewinper tablewasdiluteddown14%
toUS$10,100perday.Wewillnotbesurprised
to see this figure halved over the next two
years,giventhe largecoming increase intable
supply (4,000 tables in3years).Even then,we
think itwouldbearoundUS$4,600/table/day,
which is stillmuchhigher than theLasVegas
average (US$2,500/table/day). In Macau, the
table win discrepancy between the VIP and
massmarkets is extremelywide.Weestimate
that 1Q06 VIP tables averaged US$26,300/
table/day, andmass market tables averaged
onlyafifthof that, i.e.US$5,700/table/day.
Massmarket dominates1Q06 growth
1Q06growthwasdrivenalmostentirelybyex-
pansion inthemassmarket.Massmarketgam-
ing revenue was up +44% yoy to US$0.65m,
Macau1QTrends
DeutscheBank’sKarenTang looks atMacau’s first quarter gaming results, whichpoint to impressivemassmar-
ket growth. A stringof newcasinos set toopen in the secondhalf of 2006 suggest stronger growthahead
whiletheVIPsegmentwasuponly+3%yoyto
US$0.9m. Growth in both segments is in line
withour full yearexpectations.
Due to faster growth, the mass market
segment has gainedmarket share from34%
in1Q05 to42% in1Q06.Slot remaineda tiny
3%of total gaming revenue.
Win per slot up despite supply jump
Macau added 1,450 slot machines to a to-
tal of 4,220 in 1Q06, thanks to Mocha Slot
expansion, and opening of Tiger Slot at
the Macau Tower. Despite the 52% jump in
the number of slots over the past twelve
months, average slot win per machine still
increased 15% y-o-y to US$140 per day.We
believe this is because the introduction of
newslotmachines,suchasStargame’smulti-
playerbaccaratelectronicgamingmachines,
have significantly expanded themarket.We
expect slotwin to remainat this level for the
rest of theyear.
30,000
20,000
10,000
1Q05
2Q05
3Q05
4Q05
1Q06
2006F
2007F
2008F
11,700
Macau avg
VIPmarket
Massmarket
DB forecast
(US$/table/day)
12,200
11,600
10,800 10,100
6,400
4,700
4,600
Tablewin forecast
80%
60%
40%
20%
0%
-20%
2004
2005
1Q06
2006F
2006-08FCagr
Macau avg
VIPmarket
Massmarket
44%
34%
75%
11%
45%
17%
44%
16%
3%
-3%
2%
35%
20%
4%
38%
Gaming revenue (yoy change)
1Q05 2Q05 3Q05 4Q05 1Q06 2006F 2007F 2008F
Macauaverage
11,700 12,200 11,600 10,800 10,100 6,400 4,700 4,600
VIP segment
34,500 36,100 31,900 28,100 26,300 17,700 11,700 10,800
Massmarket segment
5,300 5,700 6,000 6,100 5,700 3,400 3,200 3,200
Tablewin (US$ / table / day)
F
1,2-3,4-5,6-7,8-9,10-11,12-13,14-15 18-19,20-21,22-23,24-25,26-27,28-29,30-31,32-33,34-35,36-37,...50
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