Inside Asian Gaming

April 2010 | INSIDE ASIAN GAMING Our revised forecasts for 2010 (MOPm) 2010 2011 2012 Old Rev 139,594 159,524 182,393 New Rev 155,211 177,767 203,686 % change 11% 11% 12% New growth 30% 15% 15% Old growth 17% 15% 15% Source: CLSA Asia-Pacific Markets Our revised forecasts for 2010 (MOPm) Jan-Mar 2010 Remaining 2010 Full year 2010 Old 61% 4% 17% New 61% 21% 30% Source: CLSA Asia-Pacific Markets Macau visa restrictions Effective date Detail Apr 07 Two visits per month. Jun 08 One visit per month. Jul 08 One visit per two months. Aug 08 Travellers through Macau to another destination in China are only allowed to stay in Macau for seven days versus 14 days previously. Sep 08 Eliminated a loophole that Chinese residents used to travel to Macau using Hong Kong visa. Oct 08 One visit per three months. Before Sep 09 One visit per two months. Sep 09 (two weeks) One visit per month. Oct 09 One visit per two months. Source: CLSA Asia-Pacific Markets Tourist arrivals in Macau (yoy growth) 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% Overall China Source: CEIC Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 24% 38% workforce that would allow it to compete in financial or professional services or other highly valued areas such as biotech. “We believe that the obvious area is tourism and the Chinese government has mentioned on many occasions that they support Macau’s drive to become a tourism and leisure hub. With the implementation of a table cap, gaming operators are less incentivised to build properties without the cash flow from gaming to support it.” “While it was not the first time China restricted mainlanders’ entry into Macau when it sensed an overheated market, the measures were more stringent than before. Entry was limited from once per fortnight to once per month effective 1st June 2008, and elevated to once every two months starting 1st July. Perhaps the most influential measure was the separation of Hong Kong and Macau visas effective 1st September. CLSA acknowledges that a potential dampener on the growth of Macau’s gaming sector growth could be the limited access to high quality labour. “In terms of human capital, we understand from the operators that hires have to be mainly local Macanese and that expats who need to renew their work permits were facing difficulties unless they are of managerial positions. During the recent policy address, the Chief Executive mentioned that this policy is now being reviewed. With two large projects coming on next year, we expect labour demand to pick up,” states CLSA. CLSA also has words of caution regarding any attempts by the Macau government to introduce a formalised policy to cap the number of tables in the market. “Macau cannot transform itself into a manufacturing hub because it does not have the land size or a sizeable, cheap labour force. Nor does it have a highly educated Chief Executive Fernando Chui Sai On 13 Market Outlook