Chinese Gaming Industry Welcomes 2012

Chinese casinos are forecasting a record-setting month in January thanks to the Chinese New Year.  This year the holiday falls on a Monday, which “effectively extends the holiday period by an additional two days as compared to last year,” according to Union Gaming Research in a note to investors.  The company’s analysts expect gaming revenue “in a range of MOP 28 billion to 28.6 billion,” which would be 51 to 56 percent growth over last January and 41 to 46 percent growth over last February, the month that the holiday fell in last year.

Union Gaming Research wrote, ““We continue to believe the VIP segment should remain strong through at least the early part of 2012, as our channel checks suggest VIP demand is growing, not shrinking (despite macro China fears) with junkets asking for additional tables at many / most properties.”  The company continued by saying that the expected spring opening of the Sands China’s Cotai Central (NYSE:LVS) will be a driver of demand just as the Galaxy Macau was surrounding its opening last May.

In the first two weeks of January the Galaxy Macau surpassed the gross gaming revenue of long-time revenue leader SJM (Sociedade de Jogos de Macau) according to Tribuna de Macau.  The newspaper reported that the six casinos run under Galaxy grossed revenues of MOP 2.1 billion while the 20 casinos owned by SJM brought in about MOP 2 billion.

Overall the gaming industry is expected to start out strong in 2012 but finish 2011 with a bang as well.  The Macau Daily Times quoted Morgan Stanley analyst Praveen K. Choudhary who wrote, “We expect MGM China (NYSE:MGM), Sands China and Galaxy to deliver double-digit growth in EBITDA on a quarter-on-quarter basis in the upcoming fourth quarter results.”