Macau is of huge importance for gaming companies as the region is still witnessing impressive growth rates. For instance, it recorded 22% growth year-over-year (yoy) in revenues in February. For our gaming companies under coverage Wynn Resorts (NASDAQ:WYNN) and Las Vegas Sands (NYSE:LVS) benefit the most from the continued growth in Macau’s gaming market with nearly 80% of Wynn’s stock value and over 50% of LVS’ attributed to this market alone. MGM Resorts International (NYSE:MGM) is also increasing its push into Macau.
China Substantial Contributor to Macau Gaming Industry
- An increasing population of Chinese high net worth individuals is the key driver behind Macau’s robust growth. According to a recent Cap Gemini-Merrill Lynch Private Wealth report, China recently surpassed the UK to become the fourth largest population of HNIs. In 2011, the region collected $33.5 billion in gaming revenues, more than five times the gaming revenues collected on the Las Vegas Strip. ((Macau gaming revenues hit $3.04 billion in February, up 22 percent, Las Vegas Review-Journal))
- According to the Macau Statistics and Census Service Monthly Bulletin of Statistics, approximately 89% of the tourists who visited Macau in 2011 came from Mainland China, Hong Kong and Taiwan.
- Increasing disposable income levels among China’s growing middle class population is driving the growth of the mass market in Macau. The mass market represents 33% of Macau’s total gaming revenues. We expect the continued economic growth, albeit slower, in China will directly translate to higher tourist visits to Macau.