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Macau’s casino companies receive rating upgrade

Niji Narayan

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Macau’s casino companies receive rating upgrade
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Brokerage Sanford C Bernstein has upgraded the ratings of Macau casinos Galaxy Entertainment Group and Sands China. This was done after a re-evaluation of the companies and also considering the capacity expansion in 2020.

According to Bernstein analysts, Vitaly Umansky, Eunice Lee and Kelsey Zhu, even as GGR is expected to decrease from 14 per cent (2018) to 3 per cent this year, there is a positive future for Galaxy and Sands in 2019. They clarified: “On a longer-term fundamental view, Galaxy now looks relatively inexpensive, especially factoring in Phase 3 and 4 developments of Galaxy Macau.” 

They added: “Galaxy continues to improve its Mass operations at Galaxy Macau and StarWorld while maintaining a leadership position in VIP. While the VIP segment is most at risk of considerable slowdown over the next 6 to 12 months, over the medium term, the key value driver is operating leverage improvement and improving business mix which will enhance margins.”

Furthermore, they explained that Galaxy “stands to have outsized growth over the long run” as it completes Galaxy Macau Phases 3 and 4.

“We continue to look favorably upon Sands China’s management team, product positioning and strategy focused on Mass market, a strong balance sheet and hefty dividends,” Bernstein analysts said about Sands China and added: “Redevelopment of Sands Cotai Central and upgrades at the Parisian will help boost its high margin Premium Mass business. The long-term (beginning in 2020) growth story from hotel suite capacity expansion and the Londoner redevelopment is evident. Sands China’s valuation look attractive for a stock that consistently trades at a premium to Macau gaming stocks and is now trading well below its historical average.”

Asia

Study Confirms High Rollers Gambled in Macau Despite COVID-19

Niji Narayan

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Study Confirms High Rollers Gambled in Macau Despite COVID-19
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A new study released by the Macau Research Centre has found that 60% of those who visited Macau during the COVID-19 pandemic did so for gambling, with each willing to spend around MOP$87,000 on average.

The research centre surveyed 103 visitors between March and May, of which 93.2% were from mainland China. With the threat of a 14-day quarantine upon leaving Macau, research showed those mainlanders chose to stay longer, with an average stay of 6.7 days. Around 59% stayed for more than five days.

The study also found that 59% of those surveyed visited Macau for gaming, while 87% had conducted gaming activities. Their gaming budget ranged from MOP$1,000 to MOP$500,000, with an average of MOP$87,000.

“Compared to the mass market, the spending decisions of this group of high-end customers may be less influenced by macroeconomic and social sentiment,” the study said.

Moreover, the visitors spent another MOP$45,549 during their visits on average, mostly on dining, shopping and hospitality.

The study also found the arrivals had visited Macau an average of 5.8 times in the last 12 months, while 83% of them had visited Macau at least three times in the last 12 months.

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Asia

Macau Gambling King Stanley Ho Dies at 98

Niji Narayan

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Macau Gambling King Stanley Ho Dies at 98
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Macau casino king Stanley Ho has died on Tuesday (May 26) at the age of 98. He was known as the godfather of Macau casinos and was instrumental in turning Macau into a gambling boomtown.

The flamboyant tycoon, who loved to dance but advised his nearest and dearest to shun gambling, headed one of the world’s most lucrative gaming businesses through his flagship firm, SJM Holdings Ltd, valued at about US$6 billion.

Ho spearheaded what is known in Macau as the junket VIP system, whereby middlemen act on behalf of casinos by extending credit to gamblers and taking responsibility for collecting debts.

Some of Ho’s children have become successful gaming operators in their own right. Daughter Pansy is the co-chairperson of MGM Resorts’ Macau unit while son Lawrence runs Melco Resorts & Entertainment.

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Asia

Asia Pioneer Entertainment Terminates Two Lease Agreements

Niji Narayan

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Asia Pioneer Entertainment Terminates Two Lease Agreements
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Asia Pioneer Entertainment (APE), the Macau-based slot machine agent, has terminated two finance lease agreements for the leasing of electronic gaming equipment (EGE). The agreements were terminated after Siam Star Leisure and GLIMEX failed to pay lease rental of around HK$17 million and HK$9 million, respectively.

APE said the group is now expected to write off the HK$26 million finance lease receivables from its 1H20 accounts and has demanded the return of the leased equipment.

Under the terms of the lease agreements, both signed in December 2018, APE has the right to terminate “without the need for any notice or demand” if the lessees fail to make any payment for equipment rental by the due date.

“The Company intends to identify new lessees for the EGE in Macau or other Southeast Asian countries,” APE said.

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