Macau casino operators are a safe haven during US economic downturn

The Bedford Report examines the outlook for companies in the Resorts and Casinos Industry and provides equity research on Las Vegas Sands Corporation and Melco Crown Entertainment.

According to Macau's Gaming Inspection and Coordination Bureau gambling revenue in Macau rose 48% in July from a year earlier as visitors from mainland China powered growth despite Beijing's moves to tighten credit.

Macau, a major market for casino operators including Melco Crown Entertainment and MGM Resorts International, is likely to post full-year revenue more than five times higher than that of rival Las Vegas. After last month's revenue report, RBS analyst Philip Tulk said he is raising his brokerage house's estimate for Macau's 2011 gambling revenue by 6 %to us$ 34.1 billion, which would imply year-to-year growth of approximately 45 %.

Las Vegas Sands recorded adjusted earnings of 54 cents per share in the second quarter of 2011, beating the year-ago quarter earnings of 17 cents a share. Sands China reported a 16.3% year-over-year growth in revenues to us$ 1.21 billion during the quarter.

Melco Crown Entertainment recently announced that it will pay us$ 360 million for a controlling stake in a new gaming resort in Macau - the company's second resort in the Asian gaming hub. Melco Crown will spend us$ 1.7 billion developing the 2,000-room resort, with construction starting as early as next year to meet a 2015 completion date, group chief executive Lawrence Ho said.