Gambling is akin to trading, but with much more risk of failure. Everyone knows Las Vegas as the gambling capital of the United States, but Macau is hot and growing.
Macau is designated a special administrative region of China, which means the area has the backing of the Chinese government for the purpose of casino development.
Attracted by abundant wealth and the appetite for risk and money in China and Asia, there has been a rapid move by the major casinos to establish and expand their presence on the island of Macau, China, which is the world’s largest gambling market, known in the gambling world as the “Monte Carlo of the Orient.”
I have visited this former Portuguese colony, which is located some 38 miles from Hong Kong, and there is an obvious push to build more high-end casinos, especially those integrated with hotel, retail, and casino operations. The market is primarily the China and Asia tourist market.
Much of the newer major development is along the Cotai strip in Macau, which will add to the original gambling establishments in the city.
The Cotai strip area is bustling with people armed with money to spend, and if the expansion plans are on target, it will inevitably make Vegas seem sedate in comparison.
In March, gross revenues in the Macau casino sector came in around $3.9 billion, up 25.4% year-over-year. (Source: Garlitos, K., “SLM Holdings Continue to Hold Top Revenue Spot in Macau,” CalvinAyre.com, April 3, 2013, last accessed May 9, 2013.)
The prospects for Macau, China are enormous; I’m betting on that, and so are some of the world’s largest casino operators.
Two of the major players expanding their presence in Macau are Las Vegas Sands Corp. (NYSE/LVS) and China-based Galaxy Entertainment Group Limited (OTC/GXYEY).
In the first quarter, Las Vegas Sands attributed its strong growth in part to its expansion in Macau, where the company’s four Cotai strip properties attracted a record 14 million visitors. The company is a major player on the Cotai strip, which is attracting even more major players. The company’s subsidiary Sands China Ltd. reported a 39.3% year-over-year jump in net revenues to $2.0 billion in the first quarter, while earnings surged 63.3% year-over-year.
Chart courtesy of www.StockCharts.com
But the company that I feel has excellent prospects is Galaxy Entertainment because of the fact that it’s an Asian-based company. The company is on an aggressive expansion path. Currently, it has two core properties—Galaxy Macau and StarWorld Hotel and Casino.
Galaxy Entertainment’s expansion plans are aggressive. The current development includes doubling the size of Galaxy Macau by the middle of 2015, and there are plans to launch Phase 3 and 4 at Galaxy Macau, to be completed between 2016 and 2018.
Two smaller casino players in the Macau China casino scene are Wynn Resorts, Limited (NASDAQ/WYNN) and MGM Resorts International (NYSE/MGM).
Macau Is Hot: China’s Version of Vegas Providing Excellent Prospects for These Entertainment Stocks was last modified: May 10th, 2013 by George Leong, B.Comm.
George Leong is a senior editor at Lombardi Financial. He has been involved in analyzing the stock markets for two decades, employing both fundamental and technical analysis. His overall market timing and trading knowledge are extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi Financial’s popular financial newsletters, including Red-Hot Small-Caps, Lombardi’s Special Situations, Judgment Day Profit Letter, Pennies to Millions, and 100% Letter. He is also the editor-in-chief of a... Read Full Bio »
Forecasts Aug. 29, 2015
Immediate term outlook:
The bear market rally in stocks that started in March 2009, extended because of unprecedented central bank money printing, is coming to an end. Gold bullion is up $1,000 an ounce since we first recommended it in 2002 and we are still bullish on the physical metal.
Short-to-medium term outlook:
World economies are entering their slowest growth period since 2009. The Chinese economy grew last year at its slowest pace in 24 years. Japan is in recession. The eurozone is in depression. With almost half the S&P 500 companies deriving revenue outside the U.S., slower world economic growth will negatively impact revenue and earnings growth of American companies. Domestically, America’s gross domestic product grew by only a meager 2.3% in the second quarter, which will negatively impact an already overpriced equity market.
Estimates Aug. 29, 2015
Trailing 12-month EPS for Dow Jones companies (Most Recent Quarter)