Nick Niglio, Neptune COO, provided most of the conference call commentary and it should not be taken lightly. Neptune is the number 2 junket operator in Macau and could soon be #1. The company operates 102 tables which will increase to 142 on October 5th through the addition of 40 tables at Galaxy’s Starworld. Neptune is currently in 6 properties in Macau with its best performing room at Wynn Macau.
- I’ve had a negative outlook on Macau stocks for quite some time, with one exception: the visa situation. My contacts in Macau believe that a new 6 month visa restriction is NOT forthcoming. Mr. Niglio agrees. Beijing remains a bit of a black box but as I speculated in my 8/25 post “MACAU: QUID PRO QUO ON VISA RESTRICTIONS”, the timing of the announcement of aid to the earthquake stricken Sichuan province by the Macanese government was very interesting.
- More positive commentary from Mr. Niglio. Neptune generated a 9% sequential increase in gaming volume from July to August, and he has seen no effect in September from the enacted 2 month visa restriction. Certainly, the impact on the operators’ mass market clientele will be greater than Neptune’s VIP business. However, the level of VIP volume is still encouraging.
- As should be expected, government intervention was a key topic of the conference call. Mr. Niglio believes the 1.25% junket commission cap may be enacted in January. I’m still somewhat skeptical that anything formal will come out of the government but wouldn’t rule out “informal” pressure to conform.
- It wasn’t all roses and chocolates. Mr. Niglio spoke about the potential negative Singapore impact on Macau. Neptune will likely benefit from the opening of that market and, in fact, the junket operator is already in discussions with Las Vegas Sands and Genting regarding a Neptune VIP room in both casinos. Other Macau junket operators are interested in Singapore as well. If you were a junket operator where would you bring your top players; Singapore with a VIP gaming tax rate of 5% or Macau at 35%?