The Macau Metro Monitor, May 21st, 2010


The SAR government is going to increase investment budget for public investment and development projects by more than MOP3.4 billion this year.  In order to fulfill Chief Executive Fernando Chui Sai's various policies and measures introduced in his 2010 Policy Address, the government would need to raise public expenditures by a total of MOP 8.45 billion. As a result, Secretary for Economy and Finance Francis Tam Pak Yuen attended the plenary meeting at the Legislative Assembly yesterday to present the bill to amend the Fiscal Year 2010 Budget.


Stronger than expected gaming revenues and therefore higher tax collections should easily fund the budget increases. Secretary Tam said “since the impact of the global financial crisis is fading away and the pace of the local economic recovery is being accelerated, the gaming tax revenues reported a more satisfactory increase than expectations over the past few months, and thus it is predicted that this year’s overall tax revenue will exceed the original forecast."



In a market that has been booming, MGM's performance has been uninspiring.  Its April numbers were sub-par, with gross gaming revenue of just HK$915 million giving the property only 6.6% market share.

MGM  is in discussions with banks about refinancing its debt and preparing for an IPO on the Hong Kong stock exchange later this year. The goal is to raise US$850 million through a club loan and raise at least US$500 million through their IPO.


IM thinks that MGM needs a better story to pitch investors aside from just a name change in order to execute on their plan. One story could be that it has been resisting demand from junkets to open more VIP rooms at the existing property due to probity issues and capacity constraints, but is now ready to make this business take off once it has raised the necessary financing to build out the necessary facilities.

Another is that the company is about to acquire a prime piece of land in Cotai on which it will build a property that will go head-to-head with the Venetian, City of Dreams and Galaxy.  Although the land in question is supposedly has a smallish plot out at the back, behind Lot 7&8, which isn't exactly enough to get investors excited. Surely there must be something better that Pansy could get her hands on?


SJM STILL RULES, OK? Intelligence Macau

IM editors still like SJM given their amazing 1Q2010 results and 50% discounted valuation compared to its US peers. Despite having lower margins, the third party business is still a significant contributor to the bottom line at HK$270MM in 1Q2010 alone.  Also Who would have thought that Grand Lisboa would be able to earn the same as Sands Macao or City of Dreams despite having to give an outrageous 57.5% revenue-share deal with its biggest VIP room operator.


As expected, Sands China has closed a US$1.75 billion project financing at HIBOR plus 4.5%, which will be used to complete construction on parcels 5 and 6.  Adelson expects the first phase of the development to feature approximately 3,700 hotel rooms and additional retail, gaming and meeting/convention facilities, to open in the third quarter of 2011.  Phase two includes a 2,300-room Sheraton hotel tower, as well as other non-gaming amenities, and is expected to open approximately six months later.  Timing for the completion of a third phase, which includes plans for a St. Regis hotel and serviced-apartments, will be announced at a later date.



People working in Macau’s gaming sector had a median monthly employment earnings of MOP13,000 during the first quarter of 2010. That figure is 44% higher than the general monthly employment earnings in Macau, which stood at MOP9,000.

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