Macau casino revenue rises by 90%

“It looks like some of the casino operators are significantly increasing their working capital,” or the amount lent to junket operators, who are paid commissions to bring in high rollers, CLSA analyst Aaron Fischer said in a note to clients yesterday. Macau in 2006 surpassed Las Vegas as the world’s biggest gambling center by revenue.

Revenue growth for casinos in the only Chinese city where they are legal is accelerating, rather than slowing down because of the “tightening” in China, Fischer said. Compared with the first two weeks of April, gambling revenue in Macau increased by 40 %, according to his estimates.

The city’s casino gambling revenue in April rose about 70 % from a year earlier to more than US$ 500 million, Portuguese news agency Lusa reported, citing data from the casino operators. Macau gambling revenue was up 57 % in the first quarter to about us$ 5 billion, according to the city government, which doesn’t release monthly figures.

China last month imposed a ban on loans for third-home purchases and raised mortgage rates and down payment requirements. The central bank this month ordered lenders to set aside more deposits as reserves for a third time in 2010. Tighter monetary policies make it more difficult for junket operators, who also provide credit to their clients.

SJM Holdings Ltd., the casino operator with the largest market share in Macau, rose 6.2 % to close at us$ 0.62 in Hong Kong, the biggest gain since March 30, while the benchmark Hang Seng Index fell 1.8 %. The stock has gained 19 % this year compared with a 10 % fall for the benchmark. SJM, controlled by billionaire Stanley Ho, yesterday said first-quarter profit rose more than fivefold to us$ 97.4 million on increased revenue from high rollers.

SJM “is gaining market share consistently,” Morgan Stanley analysts Praveen Choudhary and Corey Chan wrote in a note to clients today. “First quarter is seasonally the weakest; thus full-year 2010 should be at least higher than annualized first quarter.”

Sands China Ltd., Asia’s biggest casino operator by market value, fell 3.9 %, paring its gain this year to 8.5 %. Wynn Macau Ltd. declined 5.6 % today and has risen 13.5 % in 2010.