CASINO

Macau receives good and bad news

TAGs: Macau, MGM Macau

Good and bad news for MacauMacau has received yet another boost in the shape of a revised growth estimate for the coming years. If it wasn’t enough that revenues grow every month like an adolescent teenager, now the analysts are getting in on the act. Macaubusiness.com reports that Morgan Stanley now estimates that gaming revenue growth will be 38% for the current year. This was as opposed to their original estimate of 30%. They also added that 2012 would grow by 13%, higher than the figure they posted of 10%. An investors note from Praveen K. Choudhary and Calvin Ho said that, “in the first five months of 2011, gross gaming revenue in Macau recorded 43 percent year-on-year growth. That, along with abundant liquidity and new supply Galaxy Macau should drive further upside to consensus earnings estimates.”

Macaubusiness.com also added that the two analysts are continuing to favor the stocks of SJM Holdings.

In less encouraging news, a VIP room operator has announced it will cease operations at the MGM Macau. Asia Entertainment and Resources Ltd (AERL) reached a mutual agreement with the casino so that business will finish as of June 15. An AERL press release, reported by Macaubusiness.com, read, “The MGM VIP room is on a win/loss sharing remuneration method, and accounts for only a small percentage of AERL’s total monthly rolling chips turnover.

“The closure will eliminate the risk to the earnings volatility associated with the win/loss sharing compensation model, and will enable the company to better allocate resources – both human and cage capital – to its three fixed-rate commission VIP rooms.”

The company will continue to operate its three other VIP rooms at StarWorld, Galaxy Macau and the Venetian Macau. AERL chairman Lam Man Pou added, “We have decided to cease our cooperation because our businesses are moving in different directions. We are open to and look forward to working with MGM Macau in the future.”

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