Macau 01 (Jun 08 - Apr 12)

Macau 01 (Jun 08 - Apr 12)

Postby winston » Wed Jun 04, 2008 8:14 am

I'm very positive on Macau and have been following their story for a few years. The gambling revenue of Macau now has exceeded Las Vegas. However, I'm still looking for a long term investment angle. The Macau casinos are now bleeding from intense competition so it's not the time to invest in them. In properties, there's some demand for some mid-end properties but not the higher end ones. In a few years, there will be a bridge linking Macau to Zhuhai to HK. That bridge would be very beneficial to Macau as it will take only 30 mins to drive from HK to Macau.

=======================================

Macau to lure HK families in new approachby Timothy Chui
Wednesday, June 04, 2008

Macau is out for more from Hong Kong - not those hoping for a gambling windfall but families seeking fun.

"In the 1990s and 80s, 90 percent of visitors from Hong Kong were made up of short-trips by working class men who came over after work to try their luck," Ricardo Siu, gaming management program coordinator of the University of Macau, said yesterday.

" Today we are seeing more young people and families coming to Macau for fun and looking for non-gaming attractions," Siu explained.

Although VIP-room patronage accounted for 65 percent of gross gaming revenue in 2006, the volatility of the segment means Macau needs to encourage a mass market approach to properly ride its wave of popularity.

"That means entertainment, buffets and sightseeing. Hong Kong visitors have a higher rate of return compared to other visitors, so the key to Macau's shifting business is to make ourselves a more attractive destination," Siu said.

He said the transformation of Macau's Cotai Strip - on reclaimed land linking Taipa and Coloane islands - by 2011 would also bring many of the value-added sights and spectacles that visiting families craved.

According to a recent American Gaming Association survey of 23 Asian gaming industry leaders, non-gaming amenities are seen as a key component in competing with casino resorts in neighboring countries.

While 43 percent thought the proximity to where the customer lives is important, 24 percent believe non-gaming amenities are the best way forward.

Another 24 percent see the quality of gaming experience as key.

"Restaurants, retail and spas are increasingly important in the Asian markets.

"With 90 percent of revenue currently coming from gaming, experts almost unanimously agree that the sector will grow," AGA president and chief executive Frank Kahrenkopf said.

"A decade ago, Las Vegas was in a similar situation with gaming accounting for 70 percent of the bottom line. Today, gaming only accounts for 40 percent of its bottom line," he said.
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Re: Macau

Postby winston » Wed Jun 04, 2008 8:20 am

So far, the following are the companies that may be bidding for the Macau-Zhuhai-HK bridge:-
1) China Communication Construction
2) China Railway
3) China Railway Cnstruction
4) Hopewell
5) Shun Tak

===========================

March 10, 2008 from The Standard

The governments of Hong Kong, Guangdong, and Macau yesterday endorsed the financing scheme for bridges linking the three places and the massive project will soon proceed to public tenders.

It is expected a number of state- owned enterprises will play a major role in building the bridges.

The Hong Kong listed China Communication Construction Company (1800) and China Railway (0390) have a long history in building infrastructure projects in the mainland, Hong Kong and overseas.

China Railway Construction, which will open its retail sales book in Hong Kong today, is also said to have the capability to handle multi-billion-yuan projects.

However, neither company responded last night to a question from The Standard whether they were interested in bidding for the project.

Hopewell Holdings (0054) co- managing director Thomas Wu Man- sun said Hopewell Highway (0737) could be among the bidders.

He said Hopewell Highway had the financial capability, with around HK$6 billion in cash and a further HK$3 billion in borrowing.

Wu said his company has had discussions with the three state enterprises on the construction of bridges before but refused to say whether they discussed the Hong Kong- Zhuhai-Macau Bridge.

Wu's father, Gordon Wu Ying- sheung, had been advocating the construction of such a bridge since the 1980s.

Shun Tak group chairman Stanley Ho Hung-sun said he too is interested in bidding for the project.

Under the agreement Hong Kong will meet just over half the total cost, at 50.2 percent, with Guangdong chipping in 35.1 percent and Macau 14.7 percent.

The equation takes into account the economic benefits to each side, such as the savings in transport costs and time, as well as the costs to each side in
building their own connecting roads.

Mainland officials said last year Hong Kong's economic benefits could reach 64 percent compared with 26 percent for Guangdong and 10 percent for Macau.

Eva Cheng Yu-way, convenor of the Hong Kong-Zhuhai-Macau Bridge Advance Work Co-ordination Group said yesterday the main body of the bridge will go to tender in its entirety.

"The three sides agreed that the three governments would be responsible for the construction and operation of the boundary crossing facilities and the connecting roads to the bridge within their own territory," Cheng said.

She added the connecting roads are about 12.6 kilometers on the Hong Kong side with the mainland responsible for 13.9 kilometers.

Under the proposed construction package, the main body of the bridge will be about 29.6km. To the west, it lands on the artificial island off Gongbei, and to the east it lands on the eastern artificial island for the tunnel section just west of the Guangdong boundary.

It will be a six-lane expressway allowing for vehicle speeds of 100 kilometers an hour.

To ensure unimpeded sea traffic along the main navigation channels towards the Guangzhou and Shenzhen ports, there will be a tunnel linking up the two artificial islands that provide the bridge/tunnel switching facilities.

National People's Congress local deputy Cheng Yiu-tong warned the future actual economic benefits may be different from what is expected.

He said if vehicles using the bridge have to pay tolls, the profits should be divided along the same percentages as the costs
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Re: Macau

Postby winston » Wed Jun 04, 2008 8:23 am

Beijing, China, 10 March - The bridge connecting Zhuhai with Macau and Hong Kong will cost 42.2 billion yuan (US$ 5.94 billion) and its constructers will need 36 ½ years to recoup this investment through toll charges, the provincial governor of China’s Guangdong province, Huang Huahua, said on Saturday.

The upwardly revised cost of the bridge does not included expenses incurred for operation of border posts and access roads, which will be the responsibility of the three governments involved in the project.

Speaking on the sidelines of the National People’s Congress in Beijing, Huang said vehicles using the bridge will pay tolls for a period of 50 years.

He also said that 21 of 25 viability studies on the project have been completed and environmental impact studies will be made when these are concluded. “Only then will a public tender be launched,” said Huang. Analysts expect this international competition to begin in 2009.

The South China Post reported that the Beijing authorities have presented the predicted costs of the bridge for the first time, as well as its planned toll system.

It is estimated the three governments involved will have to spend 20 billion Hong Kong dollars on the venture, with Hong Kong providing 50.2 percent of this figure, Guangdong 35.1 percent and Macau 14.7 percent.

The 29.6 kilometer-long bridge will link the island of Lantau to Gongbei, in Zhuhai, and Macau with the journey between Zhuhai and Macau and being shortened by 20 minutes (macauhub)
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Re: Macau

Postby winston » Wed Jun 04, 2008 8:26 am

No longer invested in Kowloon Development or Polytec. I'm uncomfortable with the unrealized stock portfolio losses at Kowloon Development. As for Polytec, the price has run up quite a bit from around HK$1.65 to about HK$2.25 now.

==========================================

From UOB Kay Hian ( Feb 19 ) - Kowloon Development 034 & Polytec Asset 208

We believe the link-up with Hong Kong will give an upward push on Macau property prices, which typically are still less than one third that of similar properties in Hong Kong.

As Kowloon Development's largest project in Macau, Lot P, V and T on Macau Peninsula (held through 60%-owned Polytec Asset PAH) is located near the proposed landing point of the Bridge, construction of the Bridge will be a particularly important asset value booster for the Group.

Economic growth will support property prices in Macau.
With continuous expansion of the gaming and hotel industries driving Macau’s economy going forward, concerns over Macau’s property prices, especially for the well located projects, could be overdone.

Average land cost of the Lot P, V and T project is only HK$1,400psf, which means plenty of margins of safety compared to the current selling price of K$4,000psf.
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Re: Macau

Postby winston » Wed Jun 04, 2008 8:29 am

This will help stem the bleeding at some of the Casinos...

=====================================

HONG KONG, April 22 (Reuters) - Macau, the world's largest gaming hub, said on Tuesday it would rein in the booming industry by halting the issue of new licenses and freezing land allocations for the construction of more casinos.

In past years, Macau has flung its doors open to Las Vegas gaming giants including Wynn Resorts Ltd and the Las Vegas Sands Corp which built the Venetian Macau, turning it into the world's largest gaming hub.

But Macau's Chief Executive, Edmund Ho, made the surprise announcement on Tuesday that no land would be allocated for the building of new casinos in the tiny enclave. Nor would the number of casino licenses be increased from the current three.

Amid mounting social tensions in the enclave and perceptions of endemic graft linked to the gaming boom, Ho said the new policies stemmed in part from the wishes of Beijing.

"At this stage we've held some assessments and discussions and followed the Central Government's (Beijing's) directives on the gaming industry and decided to take these policy measures," Ho told Macau's legislators.

Macau currently has three casino licenses and three casino sub-licenses which allow a total of six companies to operate 29 casinos in the enclave, with some observers saying a consolidation of the gaming industry was now likely.

"There might be a possibility of the smaller casinos merging into the bigger casinos," said Larry So, a Macau academic and political commentator.

"We may see some of the smaller ones close up," he added.

While Macau's casinos have energised the enclave's once sleepy economy, the boom has had a darker side, spawning anti-government protests at a growing wealth gap and perceptions of endemic graft. In January, a top former official Ao Man-long was jailed for 27 years for a litany of graft charges including kickbacks to speed the construction of casinos.

The transformation of Macau, an enclave of UNESCO world heritage buildings an hour's boat ride from Hong Kong, has been nothing short of remarkable since Portugal handed it back to Chinese rule in 1999 and it liberalised its once monopolistic gaming sector.
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Re: Macau

Postby winston » Fri Jun 06, 2008 2:07 pm

Macau's Casinos Urged to Target Mass-Market Gamblers (Update1)
By Kelvin Wong and Frank Longid

June 6 (Bloomberg) -- Macau's casino industry, which surpassed the Las Vegas Strip in gaming revenue in 2006, should lure more mass-market tourists instead of relying on high rollers from China, analysts and industry officials said.

The former Portuguese colony, the only place in China where casinos are legal, is in a ``perilous situation'' because companies are chasing ``growth that cannot be sustained,'' Norman MacKillop, the Macau head of gaming industry investigator Spectrum OSO Asia, said in an interview.

Las Vegas Sands Corp. and Wynn Resorts Ltd. are among those investing at least $25 billion in Macau, where gaming revenue may more than double within three years to more than $20 billion. That's mostly driven by catering to gamblers who spend at least a million patacas ($124,000) each visit. VIP gaming accounted for 67 percent of Macau's total gaming revenue last year, up from 63 percent in 2006, according to the city government.

Investing in ``VIP rooms is actually more risky and less sustainable'' than targeting slot-machine players and tourists who play low-stakes table games, Ricardo Siu, associate professor of gaming management and economics at the University of Macau, said in an interview yesterday. The VIP market's ``profit margin is much smaller than in the mass market.''

Before Las Vegas Sands opened Macau's first foreign-owned casino in 2004, 78 percent of gaming revenue in the city came from high-rolling gamblers taken to the casinos by junket operators, who also lend money.

Higher Margins

Some VIP rooms are run by franchise owners who share the house's winnings with the casino operators and pay junket operators commissions for gaming chips they sell.

The growth fuelled by high rollers, who provide about two- thirds of gaming revenue for MGM Mirage's Macau casino, ``isn't sustainable in percentage terms,'' said Gabe Hunterton, MGM Grand Macau's vice president for casino operations. ``Profit margins in the mass market are much, much higher than in the VIP segment,'' he said in an interview yesterday at the Global Gaming Expo Asia 2008, an industry conference held in Macau.

The Crown Macau, run by Nasdaq-listed Melco PBL Entertainment (Macau) Ltd., last year reached an agreement with A-Max Holdings Ltd. unit AMA International to ferry wealthy gamblers from nearby Hong Kong and China.

Macau's gaming industry ``hasn't been able to get away from the old framework,'' the University of Macau's Siu said. ``For a while it seemed we were moving into a new era of a bigger mass market, but in the past two years it has actually taken a step back.''

Mainland Gamblers

Macau gaming revenue grew 45.7 percent last year to 83.8 billion patacas. That may expand 29 percent in 2008, according to Las Vegas-based gaming research firm Globalysis Ltd. More than half of 23 analysts and casino executives surveyed by the American Gaming Association said the Chinese city will probably maintain its revenue growth for at least a further three years.

Most gamblers in Macau come from mainland China, an economy of 1.3 billion people that's grown at least 10 percent in each of the past nine quarters.

Macau's government said in March the city's economy grew 27.3 percent in 2007 from a year earlier, the fastest pace in three years. Fourth-quarter growth was 22.1 percent.

Macau Chief Executive Edmund Ho said in April the city will stop approving land for new casinos and stop granting new licenses. It will also limit the number of gaming tables and slot machines run by existing casino operators.
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Re: Macau

Postby winston » Fri Jul 04, 2008 2:33 pm

Travel visa application accepted once a month (Update)

Authorities in Guangdong announced that residents within the mainland Chinese province will only be allowed to apply for visas to travel to Macau on an individual basis once a month from June onwards.

The Macao Daily News reported that police in Guangzhou did not give further explanation on why such measures are decided.

Guangdong had imposed tighter control to its residents to travel to Macau on an individual basis in May and August last year respectively.

Rumours has been spreading in the tourism sector that tighter measures will be imposed to mainland Chinese residents who wish to travel to Macau.

Post office staff in Guangzhou told Macao Daily News that authorities in the provincial capital has begun processing travel permit applications for 15 working days since this month. The travel permit issued to the applicant allows them to travel to Macau only once. With Saturdays and Sundays not being counted as working days, individuals basically are not able to apply for permits that will enable them to visit Macau again within the same month.

Sources also revealed that the issuance of business travel permits are also affected, with only three to five multiple entry permits issued to large companies instead of more than 10 in the past.

Public sector workers in the province are also reportedly to be affected by the restrictions.

The tourism sector suspected that the move is a further step to curb Macau’s gaming sector development.

With most of the customers to Macau’s casinos come from mainland China, the consequent social cost has got to be assumed by the mainland Chinese.

In an unrelated analysis, Standard and Poor’s pointed out that recent announcement by the Macau Government to regulate the gaming sector will make casino operators more difficult to attract customers, even though there will be no further competitors joining the battle.

The investment bank advised casino operators to ‘prepare’ for the further review of the Macau Government on gaming sector development in 2009.

Meanwhile, the Macao Daily News commentary warned that further measures to regulate Macau’s gaming sector development imposed by mainland China are on the way.

The newspaper pointed out that while restricting Guangdong residents to visit Macau can alleviate the problem of gambling addiction, it will also help in preventing market speculation, thus avoiding bubbles in the economic development.
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Re: Macau

Postby kennynah » Fri Jul 04, 2008 3:43 pm

stanley ho's days are limited...
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Re: Macau

Postby LenaHuat » Sat Jul 05, 2008 1:59 pm

All is not so rosy for Macau in 2008. I'm expecting a Las-Vegas-like slowdown.
Visitor numbers are expected to drop below last year's fantastic run. The breather, however, could be good for Macau. Apart from the mainland Chinese and Hongkongers, there is not enuff international visitors to Macau.
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Re: Macau

Postby millionairemind » Sat Jul 05, 2008 5:59 pm

Hello Lena!!! Welcome back from vacation. We miss your postings the last week :D
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Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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