07-January-2010

Shares in several Macau casino companies rallied Tuesday after Spanish news agency Lusa reported the gambling enclave’s revenues jumped 48 percent in December to $1.42 billion.

The news comes after UBS Securities upgraded its valuations for both Las Vegas Sands Corp. (NYSE: LVS) and Wynn Resorts Ltd. (NASDAQ:WYNN) from “neutral” to “buy.” Shares in Sands China climbed 9.21 percent to a three-week high of $18.15, while shares in Wynn Macau rose 6.61 percent to $68.19.

For Sands the jump indicates a breakout after prices previously experienced resistance at $16.50. Some commentators had forecast the breakout based on a recent pinch in the shares’ Bollinger Bands.

According to Thomson Reuters, several other casino companies also experienced a jump in share prices. Shares in Stanley Ho’s flagship SJM Holdings Ltd. (HKG: 0880) rose 5.7 percent to $4.63; Galaxy Entertainment Group Ltd. (HKG:0027) rose 3.1 percent to $3.32; Lawrence Ho’s Melco International Development Ltd. (HKG:0200) rose 3.91 percent to $3.72; and Las Vegas City Center owner MGM Grand (NYSE:MGM) rose 7.2 percent to $10.43.

Commenting on the rally Aaron Fischer, CLSA’s head of Asian consumer gaming, said, “The first half will be very strong; we should see momentum maintain.

“We believe the earnings will surprise significantly on the upside…. Revenue growth has been very strong for the last few months and these companies have been cutting costs a lot."

Fischer told Thomson Reuters he expects Macau gambling revenues to rise 17 percent in 2010. He also said his top picks were Wynn Macau, due to its opening a new Macau resort on April 1; and SJM Macau because of its recently opened "Casino Oceanus."

By: Phill Provance
phill.provance@acehoyle.com

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