MACAU: CREDIT A BIGGER NEAR TERM ISSUE

We will soon see how much of an impact the flood of junket credit had on the Macau market in 1H 2008. The following chart shows the quarterly Rolling Chip (RC) volume in 2008 and the 2009 volume assuming a Q4 2008 run rate. Sure there may be some seasonality associated with Chinese New Year in Q1 but the underlying credit situation is deteriorating sequentially. Yesterday, LVS President Bill Weidner commented that junket operators have been unable to collect a lot of the money they lent their VIP players.

RC volume could be down 20-25% in 1H 2009. MPEL will be impacted the most as 96% of its revenues were from RC in 2008. However, Wynn Macau and Galaxy were not far behind, each generating around 80% of their respective 2008 revenues from RC. Granted, the mass market profit margin is roughly double that of rolling chip but rolling chip generates more dollar profits than mass market. That is certainly true for most of the properties in Macau, including Wynn Macau.

Macau estimates certainly look like they need to come down.


1H 2009 Rolling Chip will be impacted by tough comparisons and deteriorating credit environment