Bank of America Merrill Lynch analyst Shaun C. Kelley spent 72 hours in Macau and found the gambling haven has a strong market.He is especially bullish on Wynn.
Here’s what he found:
- Play levels were high at Macau’s casinos even on non-holidays like Monday and Tuesday. City of Dreams (CoD), Galaxy and MGM, continue to be the most aggressive on credit terms. They are all competing more on products than price.
- In terms of infrastructure, Kelley is bullish in the long run but expects nothing major in the next 18 months. The most immediate opportunity will be the opening of the Guangzho- Zhuhai rail line at the end of 2011.
- The Cotai strip, a casino and tourism project on the 5.2 kilometer piece of reclaimed land between Taipa and Coloane islands in Macau, is expected to see more approvals this year. Wynn Resorts expects to have its Cotai project approved soon. “Our contacts continued to nearly universally credit Wynn as the best operator in the market.”
- Galaxy Macau has opened in a strong market and Venetian and CoD are most likely to be impacted by the competition in the near-term. The management is optimistic about initial reads from the floor. Galaxy Macau is expected to cannibalise its existing relationships with StarWorld.
- Las Vegas Sands is focused on improving service and has made a few key hires like Andy Cheng from Wynn Macau. Construction on some of their sites has improved and should have a partial opening in Q1 2012. “Our understanding from the Galaxy side is they have significantly ramped down the construction labour on their site with only the entertainment complex and remaining hotel rooms under construction (and the hotel rooms are mostly complete, they are just staging furniture and finishing at this point).”