Macau Casino Revenue May Increase by 50 Percent

(Bloomberg) -- Macau, the world's biggest gambling hub, may see wagering revenue grow by a record 50 percent in January, according to CLSA Ltd.

Gambling revenue in the only Chinese city where casinos are legal grew 67 percent in the first 20 days of the month, CLSA analyst Aaron Fischer said, citing unidentified people.

"The growth rate will slow down over the last 10 days but we are still looking at monthly growth of around 50 percent," Fischer said in a note to clients late yesterday. "These strong revenue numbers alongside heavy cost cutting will result in very strong earnings -- we don't think this is priced into the shares."

Macau gambling revenue surged 50 percent in the fourth quarter to 36.2 billion patacas ($4.5 billion), according to the city government, which doesn't officially release monthly figures. Las Vegas Sands Corp., operator of the Venetian casinos, made 74 percent of its third-quarter sales in Macau.

Sands China Ltd., a unit of Las Vegas Sands, fell 2.2 percent to HK$10.54 at 10:29 a.m. in Hong Kong trading, while Wynn Macau Ltd. slid 3 percent to HK$9.87.

SJM Holdings Ltd., the casino operator with the biggest market share in Macau, tumbled 4.3 percent to HK$4.01, and Galaxy Entertainment Group Ltd., which is part-owned by Permira Advisers LLP, declined 3.7 percent to HK$3.12. Melco International Development Ltd., which runs a Macau casino venture with Australia's richest man, James Packer, retreated 3.8 percent to HK$3.05.

"A significant contraction in liquidity" may hurt casino operators' revenue, Fischer said. "Liquidity goes into Macau's VIP market just like it goes into the equity and property markets."

High rollers in so-called VIP rooms contributed 66.3 percent of Macau's 120.4 billion patacas in gambling revenue last year came from high rollers.

China's economic growth in the fourth quarter accelerated to 10.7 percent, the fastest pace since 2007, stoking speculation the central bank will start raising its benchmark interest rate and tighten restrictions on the nation's lenders.