AERL turnover slides again; Xi Jinping “will improve cooperation” with Macau


aerl-xi-jinping-macauMacau junket operator Asia Entertainment & Resources Ltd. (AERL) has formally announced its intentions to seek a listing on the Hong Kong Stock Exchange. The company, which is already listed on the NASDAQ exchange, first declared its Hong Kong aspirations in August. However, the original target for filing in Q4 2012 has been pushed back to H1 2013. AERL’s fortunes have been on a downswing this year and the month of November did nothing to reverse that trend. While Macau’s overall year-on-year gross gaming revenue was up 8% in November, AERL’s rolling chip turnover fell 26% to $1.26b on a win rate of 2.11% (below the normalized win rate of 2.85% to 3%). Similarly, while Macau revenue grew 13% in the first 11 months of the year, AERL’s turnover was off 7.4% to $16.83b. As AERL has repeatedly stated, the decision earlier this year to tighten credit to agents on the mainland is primarily responsible for the decline. AERL promotes VIP tables at the Galaxy StarWorld, Galaxy Macau, Venetian Macau and City of Dreams.

AERL’s slide demonstrates the volatility that will always be a part of Macau’s VIP market – and that’s leaving aside the wild card of political interference from Beijing. On Sunday, Macau Legislative Assembly VP Ho Iat Seng attempted to temper concerns that have arisen following the detention of some Macau junket operators last month. Ho, who is Macau’s sole member of the Standing Committee of the National People’s Congress in Beijing, was quoted by Macau News describing China’s newly elected Communist Party leader Xi Jinping as someone who “knows Macau well” and “will further improve cooperation between Macau and Guangdong.” Ho said Xi placed a great deal of emphasis on Macau’s development. Only time will tell if Ho’s words represent the sober voice of calm or mere whistling through the graveyard.

Macau’s VIP market may have slackened of late, but the mass market segment has continued to show good growth throughout 2012. Nicholas J. Niglio, CEO of market leading junket operator Neptune Group, believes the mass market mouse has yet to truly roar. Using his home country as an example, Niglio told The Standard that 15% of US residents visit Las Vegas, whereas just 2-3% of China’s mainland residents currently hop the ferries to Macau. Niglio believes continued development of the Cotai Strip into a Vegas-caliber entertainment destination will help push China’s visitor percentage closer to its US counterpart. For the record, the US has a population of 315m, of which 15% is 47m. China has a population of 1.3b, of which 15% is 195m. Better hope the guys building that long-delayed new ferry terminal get the lead out…