hat was a trend reported by competitors including Sheldon Adelson's Sands China and Steve Wynn's Wynn Macau in recent earnings announcements.
Macau has been hit by slowing growth in China. That has particularly been the case with the VIP gamblers that casinos rely on for over 70 percent of overall revenue. Macau's casinos target both ultra-rich customers who spend more than us$ 157,000 at a time as well as increasingly affluent Chinese mom and pop visitors to the crammed casino enclave.
Melco, one of the six licensed operators in Macau, on China's southern coast, said quarterly net income was us$ 82.3 million on revenue of us$ 938.5 million. "This trend does not surprise us," CEO Lawrence Ho said on a conference call to investors. "It is inevitable the market would moderate," he said, adding he expected the Chinese economy to rebound next year not withstanding any further worsening in external factors such as Europe.
Ho said Melco's new development at a major immigration point connecting the gambling hub to mainland China would include a casino, adding that the company was in the same boat as rivals Wynn, Galaxy Entertainment and SJM Holdings in terms of receiving gaming tables from the government.
In July, Macau said Melco could start construction on a five-star hotel but did not specifically mention plans for a casino. Melco, the owner of the strobe-lit City of Dreams casino and lavish Alteria property, is eyeing developments in Taiwan where a local referendum was passed allowing casino resorts to be developed.
Its foray into the Philippines, which sees Packer and Ho join forces with one of that country's wealthiest men - Henry Sy, owner of local conglomerate SM Investments - will help Melco diversify at a time when Macau growth is slowing.
While Melco is facing tough market conditions in Macau, most analysts remain bullish with seven rating the stock a "strong buy" or "buy", with one "strong sell" rating.
Macau's gambling industry has seen growth sharply deteriorate in the past three months and analysts have been downgrading their full year forecasts. Gambling revenue growth this year was projected to reach 20 percent but more recent estimates have put the figure below 10 percent.