Gaming-table yield at Macau satellite venue Casino Kam Pek Paradise (pictured) is likely for 2024 to have been the “third-highest” in Macau, with only the gaming concessionaires Wynn Macau Ltd and MGM China Holdings Ltd, being higher.
Brokerage CLSA Ltd said in a Thursday report, by analysts Jeffrey Kiang and Leo Pan: “Compared with all six Macau gaming concessionaires, our published forecast implies Casino Kam Pek Paradise’s table yield – i.e., gross gaming revenue (GGR) per table – to be HKD115,355 [US$14,811]… per day in 2024, trailing behind only Wynn Macau [Ltd] and MGM China.”
Casino Kam Pek Paradise, in downtown Macau, is under the licence of SJM Holdings Ltd, and is run via a services agreement by Hong Kong-listed Paradise Entertainment Ltd.
The latter firm is also the parent of casino electronic table game (ETG) specialist LT Game Ltd. Casino Kam Pek Paradise’s gaming inventory includes LT Game’s live multi game (LMG) machines.
CLSA’s note was about its view of the fundamentals of Paradise Entertainment’s business.
The brokerage stated, explaining its view on why it estimated Casino Kam Pek Paradise as a Macau market leader in table yield: “We attribute this to the massive adoption of LMG terminals in Casino Kam Pek Paradise, which accommodates roughly 1,000 terminals within a casino floor of 200,000 square feet [18,581 sq. metres].”
The CLSA analysts said factors including “quick table turnover“ and “ultra-low minimum bets” made LMG terminals “popular among grind mass players”.
The brokerage added that as a manager of a satellite, rather than being a gaming concessionaire in its own right, Paradise Entertainment was also not constrained by the concessionaires’ non-gaming spending commitments to the Macau government.
In first-half 2024, Paradise Entertainment’s satellite casino operations business made up the bulk of the firm’s earnings.
Under a new gaming regulatory framework for Macau – coinciding with the current 10-year concessions of the six Macau operators – from the year 2026, third-party investors in Macau satellite casinos will only be permitted to earn a “management fee” via a ‘management company’.
CLSA observed in its Thursday note, referring to the satellite topic: “Uncertainty about compensation for casino managers [management entities] after 2025 remains, but we think the ‘management fee’ from 2026 onwards will be based on Casino Kam Pek Paradise’s performance in 2025 – with step-up and/or inflation-linked terms.”
Paradise Entertainment has also been refreshing its gaming machine product range.
In November, LT Game demonstrated the latest software for its LMG product platform. The software, branded “Black Coral”, is said to feature artificial intelligence (AI) capabilities, and is compatible either with the company’s new slant-top SpeedWave LMG cabinet or earlier product.
In January, the LT Game’s chief operating officer Eddie Au, confirmed to GGRAsia that it was targeting its latest EGM product, “Super Bull”, for the Macau market and Southeast Asia.
CLSA observed in its Thursday memo, regarding the Paradise Entertainment parent: “Opportunities for overseas expansion abound. The company is positioning itself to sell slot machines into overseas markets, primarily in the Southeast Asia region. “
CLSA added: “Although this business remains at an early stage, investors can enjoy further earnings upside from these overseas sales once they materialise. These sales should not come with high incremental selling expenses, and costs should be comfortably absorbed by the 60-percent to 70-percent gross margin.”
In Paradise Entertainment’s first half 2024 results, issued in August, the group said revenue from casino operations stood at HKD356.5 million, up 48.5 percent from a year earlier.
Revenue in the electronic gaming equipment and systems segment grew to HKD68.2 million in the first half this year, compared to HKD3.9 million a year earlier.
