The Macau Metro Monitor.  November 13th, 2009.




DM praises the job that Sheldon Adelson and his LVS executives have done in setting up the IPO of Sands China and raising US$1.45 billion in loan commitments to complete construction of Lots 5&6.  Compared to the situation LVS found itself in one year ago – staring down bankruptcy speculators – the company is in a strong position.  When Lots 5&6 comes online in mid-2011, Sands China will have the critical mass of hotel rooms needed to dominate every segment of the mass market from the cheap (Traders) to the mid-priced (Sheraton) to the luxury (Shangri-La). 


DM sees several bullish factors pertaining to the value of the company:

  • The Plaza is only just getting going
    • This is where the company will have a discernible advantage in the market for direct VIP players (2x as profitable as junket play)
    • The Venetian is putting Macau on the map  in new long-haul markets such as India and Japan, bringing in high-margin mass and premium-mass visitors
    • The Cotai Arena is booked solid for more than six months in advance and the MICE market is recovering and will be boosted by the completion of Lots 5&6
    • The company accounts for around 40% of Macau’s total EBITDA share and is best-placed to grow that share

While there is political risk, and the threat of lawsuits, DM believes that the IPO of Sands China will be a success.




Although cost estimates for Galaxy are now at HK$14 billion, up from HK$10 billion, DM points out that it is still HK$10 billion cheaper than City of Dreams and likely to generate similar revenues.  The stock has been downgraded recently due to the company not having enough money to finish what it has started.  


The company’s track record with StarWorld, and the ambition of the project on Cotai, demonstrates Galaxy’s ability to focus on ROI.  Over the past five quarters alone, it has earned enough EBITDA at StarWorld to pay the entire US$300 million it spent constructing the property three years ago.  Whereas junket play has been the lifeblood of StarWorld, on Cotai the company must make the leap to the mass and direct VIP play segments.  Galaxy needs a great property and marketing team to draw customers.  DM is convinced it has the former and that will provide a very attractive experience for punters.





ResortsWorld Sentosa, due to open in 2010, has been touted by many analysts as having the capability to carve out a big slice of the Asian gaming market.  The design of, and marketing behind, the resort is strong and observers are clearly impressed by the prospects of the resort.  However, DM believes that all of the marketing for RWS thus far has suggested that the company is not adept at the gaming business – certainly not in comparison to the people who will be running Marina Bay Sands, its future competitor.  If ResortsWorld Sentosa is planning on providing a theme park experience, DM points to the travails of Hong Kong Disneyland as a cautionary tale. Disneyland has been a flop in Hong Kong and Marina Bay Sands, although behind schedule, will have a far more powerful marketing machine than RWS.





DM believes that the restrictions placed on low-cost tour groups have been eased and that the next step is to end the ban on twin-city visas for individuals – which dried up ferry traffic for a while as IVS visitors couldn’t visit Macau via Hong Kong.  Traffic numbers in Macau have held up despite the recent tightening of visa restrictions by Guangdong.  However, the cooling of the credit markets by the People’s Bank of China could stymie the growth in Macau seen as more than two-thirds of its revenues comes from VIPs playing on credit from junket operators.

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