Macau on cusp of profit surge
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Macau on cusp of profit surge

Some analysts now expect Macau’s profit to climb back to heights last experienced prior to Xi Jingping’s anti-corruption crackdown, when high rollers were driven away from the tables. If they’re right, they see a new peak being hit in 2019 – assuming that no new crackdowns come out of Beijing. According to Bloomberg, revenues are set to rise 14% next year alone, largely driven by VIP gamers and “a flood of leisure tourists”.

graph 1221 macau 1

Morgan Stanley also sees profit rising in Macau. The firm says that earnings could reach $8.4 billion in 2018, and hit an all-time high of $9.6 billion in 2019. In regards to market share, the “big four” (Sands, Galaxy, Wynn Macau Ltd., and Melco Resorts & Entertainment Ltd.) look set to retain dominance. And Sands is expected to see higher EBITDA (earnings before interest, tax, depreciation and amortization), rising by “at least 11%” next year compared to 2017.

Las Vegas Sands’ share price has risen by 35% so far this year

graph1221 macau 2

SOURCE: Yahoo Finance

None of this is to suggest Macau is impervious to wider considerations. A slow down in China, further crackdowns from Beijing, or unexpected difficulties in the tourist sector could all present a barrier to the region’s performance. However, at present, none of those things look to be on the horizon. And that means lady luck is – for the moment – smiling on Macau.


Disclosure

Dominion holds Las Vegas Sands in its Global Trends Luxury Fund.


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