International edition
June 16, 2021

Xi Jingping lays Macau’s casino industry under microscope

Billionaire magnates hit by USD 100 B in Macau casino losses

Billionaire magnates hit by USD 100 B in Macau casino losses
(Macau).- Almost USD100 billion was wiped off the market value of the six Macau casino stocks in 2014 after a crackdown on corruption by the Chinese government led the gambling enclave to report its first-ever fall in gaming revenue. Gambling billionaires
Macau | 01/06/2015

(Macau).- Almost USD100 billion was wiped off the market value of the six Macau casino stocks in 2014 after a crackdown on corruption by the Chinese government led the gambling enclave to report its first-ever fall in gaming revenue. Gambling billionaires James Packer, Sheldon Adelson and Stanley Ho have been left with large holes in their pockets as analysts debate when might a recovery may turn the fortunes of the world's largest gambling hub.

T

he six Macau casino stocks listed on the Hong Kong exchange lost a combined market value of USD 91.6 billion in the 12 months up until December 31, analysis have shown.

The plunge accounted for a 40 percent fall in market capitalization.

Mr Packer's Macau joint venture, Melco Crown, which recently said it would leave the Hong Kong exchange but will keep its American listing, lost $HK61 billion in market capitalization over the course of the year. The decline represented a 35 percent drop in the value of the stock.

In contrast, Melco's value more than doubled in 2013 when gambling revenue rose 19 percent. The company is controlled by Crown Resorts, which is half-owned by Mr Packer, and casino heir Lawrence Ho. Each party owns 33.6 per cent of the joint venture, respectively.

Melco's drop in market capitalization was far from the worst.

Sands China, in which held by a subsidiary of Sheldon Adelson's Las Vegas Sands holds 70 percent, recorded the largest market capitalization drop among the six stocks, . The stock lost 40 percent of its value tin 2014.

SJM Holdings, the casino company controlled by Stanley Ho, the father of Mr Packer's joint venture partner, Lawrence, suffered a 52 percent loss in value that accounted for a market capitalization loss of $HK73 billion.

Chinese President Xi Jingping's crackdown on corruption, as well as efforts to stem the flow of illegal money into Macau through debit card scams, has dragged down gambling activity among both VIP and mass market punters.

Gaming revenue in Macau, the only region in China where its citizens can legally gamble, fell 2.6 percent in 2014 to 351.5 billion patacas (US$ 54.4 billion). It was the first fall in revenue in 11 years since 2002, when the casino market was reformed and opened up to competition.

Revenue fell 30.4 per cent to 23.3 billion patacas in December, which was the seventh straight monthly fall.

There is little consensus among analysts about what will happen in 2015. Among the eight analysts surveyed by Bloomberg, estimates for gambling revenue growth in Macau in the coming year ranged from a fall of 9 percent to a spike of 10 percent.

Most agree that there will be an eighth-straight month of gaming losses in January, which would beat a record losing streak in 2008-09 when revenue dropped seven straight months amid the global financial crisis, Bloomberg reported.

Morgan Stanley analyst Praveen Choudhary downgraded his growth estimates to a 4 percent fall in 2015, followed by a 10 percent growth the following year, on account of worsening conditions for mass market punters. "We predict that mass revenue, including slots, will remain flat in 2015, before growing 18 percent in 2016, fueled mainly by new hotel rooms and steady growth in spending per capita," Mr Choudhary said in a note to clients.

However he forecasted a "change of luck" for stocks in 2015 because of improving quarterly growth rates from the first quarter and the addition of new tables in a number of casinos. High-roller activity in Macau could also recover as interest rate cuts increase the cash available to junket operators, and an improving outlook for Chinese property buoys punters' sentiments, he said.

What is your opinion about this article?
  • I like it
    %
    0 votos
  • I don't like it
    %
    0 votos
  • I have not thought about it
    %
    0 votos
Leave your comment
Newsletter Subscription
Subscribe to receive the latest news and updates
Enter a valid email
Complete the captcha
Thank you for registering to our newsletter.
Follow us on Facebook