China’s crackdown on corruption has done little to stem the flow of willing punters into Macau’s casinos judging by the performance of Sands China, which increased quarterly net income 63 per cent to $453m.
The strong performance in the first three months of the year was driven by the addition of the Sands Cotai Central, which opened in two phases in April and September last year, and by healthy growth at the Venetian Macao.
Sheldon Adelson, chairman, said the group attracted a record 14m visitors to its Cotai Strip properties, the biggest reclaimed-land region of Macau, in the quarter. He added that the new Parisian Macao casino could be open earlier than expected in late 2015.
The slowdown in China’s economy, combined with the crackdown on corruption and on officials’ spending on junkets and gifts, had been expected to hurt the gaming industry as well as luxury goods and car sales.
However, Aaron Fischer, head of consumer and gaming research at CLSA in Hong Kong said the impact of the crackdown appeared limited so far. He said overall Macau gambling revenues had still grown at 14 per cent in the first four months of the year versus same period last year.
“The simple story for Sands is that it is the only one able to grow its earnings at very high rates, because it has just opened the Sands Cotai, the only new venue at a time when Macau is running at absolute capacity,” he said.
Occupancy rates in Macau hotels are running at about 95 per cent, while the average minimum bet on gaming tables has increased in the past 12 months from HK$300 to HK$600, Mr Fischer added.
The parent group, Las Vegas Sands, said in March that it may have breached the Foreign Corrupt Practices Act, for which it is being investigated by the US Department of Justice and the Securities and Exchange Commission.
Las Vegas Sands beat expectations with a 14.6 per cent rise in its first-quarter net income to $572m. It said Macau and Singapore drove its growth.
Meanwhile, Genting Singapore, another casino operator, said its first-quarter earnings before interest, tax, depreciation and amortisation dropped to S$249.7m from S$381.4m a year ago.
Sands Cotai Central added $131.5m to Las Vegas Sands’ ebitda in the first quarter, which overall grew 39 per cent to $626.4m. Without the contribution from the new venue, ebitda would have grown less than 10 per cent, or only $44m.
Sands China’s growth rate will look much less impressive from next quarter when last year’s comparison will begin to include the new Sands Cotai Central casino.
The shares slipped by almost 1 per cent in Hong Kong to HK$40.30.
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