Inside Asian Gaming

99 | INSIDE ASIAN GAMING REGIONAL BRIEFS Stellar First Quarter for Sands China Macau casino giant Sands China posted a 63% increase in profit for the first quarter. Net income for the Hong Kong-listed subsidiary of Las Vegas Sands Corp. (HK: 1928) rose to US$452.9 million from $277.4 million in the same period in 2012 on revenue that was up 39% to $2.02 billion. Adjusted earnings before interest, taxes, depreciation and amortization—the key industry measure of the ability to turn sales into cash flow—climbed 39% to $626.4 million. For the three months ended 31st March, the company counted a record 14 million visits. Sands China has been expanding aggressively at the territory’s popular Cotai resort district, a stretch of reclaimed land joining the Macau-administered islands of Taipa and Coloane that has begun to surpass the Macau peninsula proper as the must-see place in the city for the Chinese mass market. Last year, Sands added a three-hotel, two-casino complex called Sands Cotai Central to its portfolio, which includes The Venetian Macao and the Plaza on Cotai and Sands Macao on the peninsula. and announced in January that it had received government approval to add 200 additional table games. Sands plans to invest another $2.8 billion to build a fifth resort, a themed extravaganza called Parisian complete with a replica of the Eiffel Tower on a portion of its Cotai land holding Wynn Macau Profit Surges in Q1 Wynn Macau Ltd (HK: 1128) reported a 19% year-on-year increase in first-quarter net income to US$249 million on the back of a 4.4% growth in revenue to $992.1 million. Property earnings before interest, taxes, depreciation and amortization rose 14% to $330.7 million. Winnings at Wynn Macau’s mass- market tables grew 14% to US$243.1 million. Although VIP turnover (measured by rolling chip sales) declined 15% to $28.4 billion, overall VIP revenue was supported by luck, with by an increase in the VIP win percentage to 3.14% in Q1 2013, compared to 2.59% in the previous year’s quarter. “Its revenue growth is less than that of the market in Macau, likely due to new competition on Cotai,” commented Tim Craighead, a Hong Kong-based Bloomberg Industries analyst. In February, the company started construction of a Cotai resort which it plans to open in the first half of 2016. The total budget for the project will be $3.5 billion to $4 billion. Meanwhile, Union Gaming Research Macau’s Grant Govertsen points out: “Although Wynn Macau remains largely capacity constrained until it can open its Cotai project in early 2016, the existing asset remains, in our view, the most aspirational in town.” Mass Market Drives Melco Crown’s Q1 Results Dual-listed Melco Crown Entertainment Ltd (Nasdaq: MPEL, HK: 6883) announced an 11.5%year- on-year increase in first-quarter net revenue to US$1.15 billion, driving a 12.8% rise in earnings before interest, tax, depreciation and amortization to US$274 million. Union Gaming Research Macau’s Grant Govertsen is particularly excited about Melco Crown’s prospects, writing: “MPEL continues to set the bar higher, and we believe its quarterly EBITDA run-rate is likely to approach US$300 million during the back half of the year. Trends across Macau remain very strong, with VIP continuing to inflect positively (MPEL VIP volume +18% portfolio-wide during 1Q13), and mass market remaining very robust (MPEL mass table GGR +32%). With the right physical plant in the form of City of Dreams, we look for MPEL to continue to outperform the market.” Mr Govertsen stresses the company’s mass-market segment “continues to be the most exciting driver of earnings at MPEL.”Melco Crown’s first-quarter mas-market revenue was up 32% year on year, while combined VIP revenue at its two properties, Altira and City of Dreams, grew 12%, with VIP win rate a little on the low side at 2.77% MGM China Posts Record High in First Quarter MGM China Holdings Ltd reported a 6% year-on-year increase in net revenue at MGM Macau to US$747 million, with adjusted earnings before interest, taxes, depreciation and amortization up 10% to $192 million before deducting the liicence fee it pays parent company MGM Resorts International. Grant Bowie, chief executive officer and executive director of MGM China, stressed that the company’s “growth especially in the mass market is very encouraging and confirms that the Macau market is diversifying as a destination market as customers look for tourism and leisure activities to enhance and extend their visit to Macau.” Sands Cotai Central Encore at Wynn Macau City of Dreams MGMMacau