GGRAsia – More junkets to close, survivors will be in shape: LVS exec

More junkets to close, survivors will be in shape: LVS exec

Jan 28, 2016 Newsdesk Latest News, Macau, Top of the deck

There are likely to be more closures of Macau junkets in 2016, says a senior executive of casino operator Las Vegas Sands Corp.

Rob Goldstein, president and chief operating officer of the firm, and also a non-executive director of its Macau unit, Sands China Ltd, made the remark during a conference call on Wednesday giving commentary on the group’s fourth-quarter and full-year earnings.

“Obviously some have folded, I think more will fold later this year,” he told investment analysts.

The number of licensed gaming promoters in Macau – also known as junkets – shrank by 23 percent over the past 12 months it was disclosed this week by the Macau government. Junkets are a key component of the city’s casino industry as they are involved in recruiting high roller players and organising credit for them to play in Macau’s casino venues.

But Mr Goldstein also noted in his remarks that the junkets that do remain in the Macau market appear to be in good health.

“The ones that are still standing – and we met with some of the top people there last week – …actually they’re in pretty good shape and there is sufficient liquidity,” said the executive.

JP Morgan Securities (Asia Pacific) Ltd – in a Wednesday report following a recent visit to Macau – also picked up on the junket liquidity question.

“Junkets and operators have not yet observed any discernible impact from renminbi devaluation and arguably tighter capital control, neither on players’ behaviour (e.g., gambling budget, spending pattern) nor junket liquidity,” said analysts DS Kim and Daisy Lu.

They were referring firstly to the purchasing power of China’s currency and a raft of measures on the mainland and some in Macau, designed to monitor or limit the flow of capital from the mainland.

Grant Govertsen of Union Gaming Securities Asia Ltd said in a note on Thursday: “Most of these [Macau] junkets that disappeared from the list this year, in all likelihood, were on life support in 2015 and therefore their loss will not be cause to take our VIP [revenue] expectations lower.”

He added: “Ultimately, the recent batch of 35 junkets not relicensed were already baked into the GGR cake and therefore there is no reason to contemplate changes to our forecast as a result of this new data.”

He was referring to his firm’s estimate of a 12 percent year-on-year decline in Macau during 2016 in VIP casino gross gaming revenue (GGR); and to a recent announcement by Paulo Martins Chan, head of Macau’s casino regulator, the Gaming Inspection and Coordination Bureau, that it had not renewed the licences of 35 junkets as they had failed to submit information required under new accounting rules for the sector.