Reports yesterday has just confirmed that Macau's gambling revenue in December had surged 66% from a year earlier, capping a year in which the territory's revenue from casino gambling soared 58%. This result is well above initial forecast made by both analyst and officials in 2010.
This huge increase in revenue came despite Beijing and Macau officials urging the city to diversify its economy dependence on gambling and apparent efforts by the government to tame the industry growth.
The Asia gambling industry seems like an unstoppable train and is set to growth further in 2011.
We are already long LVS)" ticker="NYSE%3ALVS">LVS and SJM Holdings Limited (HK:0880) and will continue to constantly monitor their respective price movements. As of now, the Macau government seems to be putting a stop to granting any further sites in Cotai area for development by Casinos, as seen by them rejecting both Sands China and SJM Holdings applications. The unprecedented move came after the government reiterated it wouldn't approve new casino projects submitted after 2008, and that it would no longer grant land for casino projects without a public tender.
If it is true that the Macau and Chinese government were to successfully tame the gambling industry growth, then it seems only logical to put the money in the market leaders now. Smaller players in Macau will find it harder to catch up with the big boys. As such LVS, Wynn and SJM seems to have an advantage now.
Apart from Macau, the other country with an interesting gambling market will be Singapore. LVS owns the Marina Bay Sands which is only one of the two casino license given out by the Singapore government. MBS is schedule to be completed in 2011 and we expect their revenue to grow healthily in 2011.
All in all, 2010 had been a wonderful year for stocks, and hopefully 2011 will be even better. Happy belated New Year!
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