Sands China leads casino stocks’ jump as sales meet estimate
HONG KONG: Sands China Ltd led gains in Macau casino stocks as the world’s biggest gambling hub reported revenue that was in line with the government’s estimate.
Sands China Ltd. surged 7.1% to HK$42.95 in Hong Kong trading, Galaxy Entertainment Group Ltd climbed 6.6% and MGM China Holdings Ltd advanced 5.2%.
Total casino revenue fell 12% to 25.6 billion patacas (US$3.2bil) in September, the fourth straight month it’s declined.
The figure, the biggest drop since June 2009, was expected to drop by 12% to 13% from a year earlier, state-controlled Teledifusao de Macau reported last week, citing the city’s Secretary for Economy and Finance Francis Tam.
“You get the dynamic now whereas these gaming names have been so crushed that even a slight improvement is viewed positively,” said Grant Govertsen at Union Gaming Group.
“You got a lot of investors who want to be in these names looking for an entry point,” he added.
Wynn Macau Ltd. climbed 4.8%, SJM Holdings Ltd advanced 5.5% and Melco Crown Entertainment Ltd. gained 3.6%.
Chinese President Xi Jinping’s crackdown on corruption has dented spending by highstakes gamblers in Macau, the only place in China where casinos are legal.
Pro-democracy demonstrations in Hong Kong may have caused mainland Chinese to defer their usual joint Hong Kong-Macau trips, Govertsen wrote in a note.
“Mass market casino foot traffic - especially at the big- box casinos on Cotai - and certain instances of table games minimums, was lower than we expected,” he said.
Casino companies have been opening resorts on the Cotai Strip, Asia’s answer to the Las Vegas Strip.
About 20% to 25% of mainland travelers to Macau also go to Hong Kong on the same trip, said Karen Tang, an analyst at Deutsche Bank AG
High rollers account for more than 60% of the city’s gaming revenue.
The number of Chinese tourists normally rises during China’s annual week-long National Day holidays that start on Oct. 1, one of the city’s busiest times of the year.
The political protests in Hong Kong “would put further pressure on VIP visitation,” said Govertsen, using the term that refers to highstakes gamblers. — Bloomberg