Amidst concerns that the impending government change in China will thwart spend in Macau’s casinos, operators are reeling in continued success with big future plans. Revenue hit an all-time high last year up 13.5 percent to $38bn, prompting analysts to revise their growth estimates for 2013.
In a note released by HSBC this week, gaming analysts Sean Monaghen and Sachin Varma increased the bank’s 2013 gross gaming revenue growth estimate from 12.9 to 13.5 percent. The projections are based on VIP gaming revenue and mass market gaming revenue increasing from 7 to 7.9 percent and 25 to 26.1 percent, respectively.
“We believe 2013 will see Macau companies announcing new non-gaming leisure developments on neighbouring Hengqin Island that could further enhance the growth potential of their Macau gaming resorts,” added Monaghen in a note to investors.
Investment banks Citigroup and Goldman Sachs have also reported positive gaming growth projections for Macau, both in the double-digits. Citi forecasts that casino revenue will increase by 10 percent year-on-year in 2013 to $41.7bn and Goldman Sachs estimates a 16 percent revenue growth during the full-year.
There is still potential for explosive growth in Macau. From a population of over 1.3 billion in mainland China, only 30 million tourists visited Macau in 2012, according to the Macau Tourist Office. Analysts suggest new infrastructure projects coupled with resorts offering diversified amenities will help drive visitation through the year.
Growth momentum is expected to develop from the mass market in China. Melco Crown and Galaxy both focus on Macau-centric properties and are expected to benefit the most as the market shifts away from a reliance on the VIP sector. US-based LV Sands and Wynn Resorts also continue to forge ahead with expansion plans.
Since the market was liberalised in 2002 and exclusive licenses were granted to operate in the territory, it is the first time that all six concessionaires have new projects either in development or about to enter the construction phase. This building boom, mainly focused on the Cotai Strip, is likely to focus investor attention on new project value with stock prices expected to increase across the board.