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Five Star Equities Provides Stock Research on Melco Crown Entertainment & MGM Resorts...
NEW YORK, NY, Jan 19, 2012 - Casino stocks have been on the upswing this week as positive news out of China helped drive shares of gaming companies with a heavy presence in Macau higher. China said its economy grew by 8.9 percent in the fourth quarter, which was slower than the previous quarter. Analysts, however, consider these levels "robust," the Associated Press reports. Five Star Equities examines the outlook for the Resorts and Casinos Industry and provides equity research on Melco Crown Entertainment Ltd. MPEL +0.27% and MGM Resorts International MGM -0.39%.
According to data published by the Macau Gaming Inspection and Coordination Bureau (GICB), gross gaming and gambling revenues in Macau totalled 269.058 billion patacas (US$33.632 billion) in 2011. MacauHub.com reports that revenues in 2011 were an almost five-fold increase on revenues in 2006 (57.521 billion patacas). Revenues also jumped from 189.588 million patacas in 2010.
By the end of 2011, there were 34 casinos in Macau, 20 of which were owned by Sociedade de Jogos de Macau, three by Venetian Macau, five by Galaxy Casino, three by Melco/PBL Jogos (Macau) and one each by Wynn Resorts and MGM Grand Paradise.
A recent article from Forbes helps explain why Macau continues to grow at such a rapid pace. For example, Macau has initiated a series of initiatives to encourage visitors, Forbes reports. The tiny island investing in new transportation links to ease travel for Chinese visitors. Now, a new railway line connects Macau to Guangzhou in China and a new road bridge links it to Hong Kong.
With China's middle class continuing to expand, Forbes highlights an increase in disposable income in China's population, which is driving the growth of mass market in Macau.
Melco seeking Studio City loan...
Local gaming operator Melco Crown Entertainment is in negotiations with banks to try to raise up to MOP 16 billion in debt to fund the development of long-delayed Macao Studio City project.
According to sources quoted by Bloomberg, the Hong Kong-listed company is seeking a loan of around USD 1.5 billion (MOP 12 billion) and will also issue bonds worth USD 1 billion (MOP 4 billion), Reuters adds Melco is currently negotiating with banks to ensure the financing, in case there are not enough takers. The company is about three to four weeks away from hiring banks, sources said.
A source claims the debt will be used to build up Macao Studio City. Last year Melco Crown’s co-chairman Lawrence Ho Yau Lung said the operator would invest USD 1.7 billion (MOP 13.6 billion) in the development of the Cotai project. He added that construction would commence in 2012 and the property may open in 2015.
But there is still no word on whether Studio City will have a casino. On Wednesday the secretary for Transport and Public Works, Lau Si Io, told lawmakers the introduction of a gaming space at the project has not yet been approved.
“And in order to make it a reality, of course, we would need the necessary gaming tables to make the project financially viable for us,” Ho acknowledged last August. The son of ailing tycoon Stanley Ho Hung Sun said he was confident of gaining authorities’ support.
“Before we even undertook investing in the Macao Studio City project, we had dialogue and communication with various levels of the Macau Government and they have been very supportive throughout the way,” Ho said.
Melco and the other five gaming operators all climbed in Hong Kong trading yesterday on expectations they will benefit from more mainland China visitors during the coming Lunar New Year holiday.
“Investors are expecting the footfall in Macau casinos to rise during the Chinese New Year,” said Edwin Fan, an analyst with Bank of China International in Hong Kong, quoted by Bloomberg.
But the holiday period will come too soon for new resort Sands Cotai Central, which will open “between March 22 and 27,” wrote HSBC Global Research’s Sean Monaghan in an investors note.
The analyst, quoted by Macau Business, believes the resort will account for 28 percent of Sands China’s earnings for 2013.
Melco Crown Jumps to Two-Month High in U.S. on Loan Speculation...
Melco Crown Entertainment Ltd. rose to a two-month high in U.S. trading on speculation the Macau casino venture between billionaires Stanley Ho and James Packer is seeking a loan to fund the development of a new project.
American depositary receipts of Melco gained 3.2 percent to $11.18 by 10:41 a.m. in New York, the highest intraday level since Nov. 9. The ADRs, each representing three common shares in the Hong Kong-based company, have increased 6.2 percent over the past three days.
Melco Crown approached banks to finance its Studio City project in the former Portuguese colony city that is the only place in China where public gambling is allowed, according to four people familiar with the matter who asked not to be identified as the details are private. The loan may be about $1.25 billion, two of the people said.
Studio City will be an integrated resort with a “theme and demographic focus” aimed at differentiating it from the company’s existing portfolio of assets, according to Melco Crown’s website. The company is about three to four weeks away from hiring banks, the people said.
Melco Crown’s shares gained 2.2 percent earlier today in Hong Kong to HK$28.15, the equivalent of $3.63 per share. The ADRs are trading at a 2.7 percent premium over the Hong Kong stock.
MGM China Leads Gains in Macau Casinos Ahead of New Year Holiday...
MGM China Holdings Ltd. and Galaxy Entertainment Group Ltd. led gains in Macau casino operators on expectations they will benefit from more mainland China visitors during the coming Lunar New Year holiday.
MGM China advanced as much as 6.9 percent to HK$11.48, the highest intraday level since Nov. 9, before trading at HK$11.38 at 11:34 a.m. in Hong Kong. Galaxy Entertainment climbed as much as 5.8 percent, its biggest intraday gain since Dec. 1.
The week-long Lunar New Year holiday kicks off on Jan 23 and tourists from mainland China tend to boost gambling and shopping revenue in Hong Kong and Macau during that period.
“Investors are expecting the footfall in Macau casinos to rise during the Chinese New Year,” said Edwin Fan, an analyst with Bank of China International in Hong Kong.
Casino revenue in Macau, the world’s largest gambling hub, rose 25 percent in December to 23.6 billion patacas ($3 billion), as Chinese tourists spent more. Chinese gamblers have fueled growth in the former Portuguese colony, where gambling sales have more than tripled in the past four years.
Wynn Macau Ltd. rose as much as 5 percent and Melco Crown Entertainment Ltd. as much as 3 percent.
Sands China Ltd., the Hong Kong-listed unit of billionaire Sheldon Adelson’s Las Vegas-based company, climbed as much as 4.4 percent. SJM Holdings Ltd., Asia’s biggest casino operator by revenue, gained as much as 3.4 percent.
Packer eyes another big investment in Perth casino, as Chinese tourism soars...
Gaming billionaire James Packer is believed to be eyeing another massive investment in Crown's casino in Perth, talking with the state Government about acquiring land for a new hotel and entertainment complex.
According to the Australian Financial Review, Western Australia Premier Colin Barnett is supportive of the idea of another hotel for the listed company.
The report follows the casino group's decisions to change the casino's name from Burswood to Crown Perth, and Packer's comments he wanted to do more build up more attractions such as golf course in the city.
Sources close to the project expect Crown to invest under $1 billion, the paper says.
Housing Industry Association chief economist Harley Dale says commercial has outperformed residential property in the aftermath of the global financial crisis.
"If you were to generalise, you'd say commercial has outperformed there and it's reasonable to take this as another vote of confidence in the medium-term outlook in the WA economy as a whole," Dale says.
Dale says there are signs that hotels, warehouses and the office sector have good growth outlooks, he says.
"At the same time, you seem to continue getting these ticks in the box for aggregate economic conditions in WA, but there are a lot of sectors – such as residential – that are losing out."
Packer last year raised eyebrows by saying Australians over-estimated the effectiveness of their tourism campaigns, and risked ignoring the emerging Asian middle-class.
The Crown Perth plans come as official tourism figures show short-term arrival figures were up 0.8% in the year to November but short-term resident departures soared 8.1% over the same period.
The Australian Bureau of Statistics figures, released yesterday, show that the number of tourists from China rose by 19.7% in the year to November 2011, followed by a 6.3% rise from India, a 3.2% rise from New Zealand and a 1.1% rise from Singapore.
Conversely, tourist numbers from the United Kingdom fell by 6.5%, 5% from the United States, 8.8% from Korea and 9.9% from Japan.
You bet, internet gambling on the rise...
Internet gambling is on the rise, with convenience and accessibility contributing to its popularity, research has found.
The findings follow the largest survey of internet gamblers to date in Australia with more than 6680 people participating in the self-selected, online questionnaire.
Dr Sally Gainsbury, from Southern Cross University’s Centre for Gambling Education and Research, said internet gamblers had significantly more positive attitudes towards gambling.
“People appear to be gravitating towards online gambling because of the availability and the convenience,” she said.
“It can be accessed anytime, anywhere.
“But for people with existing gambling problems, internet gambling may create additional risks.”
Dr Gainsbury said overall the research showed internet gamblers were not more likely to be problem gamblers but they did appear to be at higher risk of developing problems.
She said internet gambling posed particular risks to players; it was constantly available and people could play online in private with relative anonymity.
More than half of the 450 problem internet gamblers responding to the survey said the use of credit cards or internet bank transfers increased the amount they spent compared to less than one in 10 of the 2270 non-problem internet gamblers.
Southern Cross University and the University of Sydney conducted the research.
Anita Hartley at Mission Australia’s North Coast Gambling Counselling Service is not surprised by the research findings.
“Our service is seeing a steady increase of people with online gambling issues and it is a real concern,” she said.
Ms Hartley said she had seen first-hand that it did appear to target the vulnerable.
She said we needed a strong approach to work out sensible safeguards for people, including good government regulation.
“We would encourage the Australian government to take a leading role in influencing the design of global consumer protection standards while online gaming is still in its infancy,” Ms Hartley said.
Internet gambling’s popularity has soared in the past few years with trends indicating an increasing number of people starting to gamble online.
More than half of the survey participants started gambling online from around 2006.
Mission Australia recognises while Australia has a ban on online gaming, Australians can gamble using offshore websites.
“While we do not wish to see a proliferation of online gaming in Australia, we also recognise that a well regulated Australian industry could help to reduce the impact of unscrupulous overseas providers,” Ms Hartley said.
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