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GREATER CHINA 8

Reduced rates “Same-store” rates were down 13 percent year-on-year in September, according to Wells Fargo analysts. The brokerage noted that the opening of Wynn Palace, The Parisian Macao, and Studio City has seen Cotai Strip supply up 17 percent year-on-year. That follows a 12.2 percent decline in prices in August. However, average hotel occupancy reached 92.6 percent, up 4.4 percentage points compared to 88.2 percent in August 2015. MGM Resorts is scheduled to open its MGM Cotai property in the second quarter of next year, having pushed back the date due to market conditions, while ultra high end hotel project The 13 has also delayed its opening until early next year. With a gross floor area of approximately 945,000 square feet, The 13 Hotel offers approximately 200 duplex suites and villas and a suite of Rolls Royces for guests. It will be one of the most expensive hotels ever built. SJM had also been planning to reopen its revamped Jal Alai hotel and casino by the end of this year, though the timing is now uncertain.

SJM HOLDINGS (880:HK) Has 20 casinos on the Macau Peninsula. Mass market property the Jal Alai is being revamped and is now expected to reopen towards the end of the year, with 130 rooms and 45 gaming tables. The company is currently building The Grand Lisboa Palace on Cotai, which is scheduled for completion towards the end of 2017. The casino’s original plans were for 700 gaming tables and over 1,200 slot machines across a gaming floor area of approximately 27,000 square metres. The resort will feature a Palazzo Versace hotel and a Karl Lagerfeld Hotel and the total production cost is estimated at about HKD$30 billion ($3.8 billion). SJM in March opened a new gaming area at the Grand Lisboa, which includes 870 square meters of space, with 10 gaming tables and over 40 slot machines as well as a dining area. For Q3, the company reported an 11.1 percent drop in gaming revenue to HK$9.99 billion and EBITDA of $810 million, 8.4 percent lower than the prior year.

GALAXY ENTERTAINMENT GROUP (27.HK) Has three main properties and runs three City Club casinos inside hotels. The company’s Asia Gaming Briefings | November 2016

new Galaxy Macau Phase 2 and Broadway at Galaxy Macau opened on May 27, 2015, almost doubling the capacity of the resort. The group was recently granted an extra 100 tables, adding to the original allocation of 150 tables. That’s still far short of the 400 it had requested, but brings it in line with the table award given to Melco Crown Entertainment’s Studio City. In August, the group’s StarWorld Hotel officially opened its new mass gaming floor on the third floor with a 108-seat electronic table game arena. The floor will also feature 14 gaming tables and 159 slot machines. The operator said it continues to move forward with Cotai Phase 3, “with the potential to commence site preparation works in late 2016 and Phase 4 in 2017.” In Q3, the group reported an 8 percent year-on-year rise in net profit, above analyst expectations and said it was “encouraged by the continuing signs of market stabilization.” The company reported profit of HK$2.7 billion ($348.1 million) for the quarter ended in September, while revenue rose 5 percent to HK$12.9 billion. Group adjusted EBITDA rose 28 percent year-on-year to HK$2.7 billion. Galaxy mass revenue grew 17 percent year-on-year, better than market growth of +6 percent year-on-year, Morgan Stanley said. Non-gaming revenue also grew 18 percent quarter-on-quarter, driven by a 24

percent quarter-on-quarter growth in retail rental income.

SANDS CHINA (1928:HK) Has five properties in Macau. The new $3 billion The Parisian Macao opened in September and received a highly positive reaction from analysts, who called it the right product, targeting the right segment at the right time. It features a scale replica of the Eiffel Tower, nearly 13,000 hotel rooms, two million square feet of retail-mall offerings and two million square feet of MICE capacity. The company recently announced its retail line up for another 170 shops. An air-conditioned walkover bridge with moving sidewalks is also planned, which will connect The Parisian Macao to Sands Cotai Central. With the opening of The Parisian Macao, Las Vegas Sands now dominates the centre of the Cotai strip, with the Venetian next door and Sands Cotai Central across the road. Significantly the resort stands in between Melco Crown Entertainment’s City of Dreams and its new sister property, Studio City. Sands was still only awarded 100 tables at the open, like the VIP-focused Wynn Palace. The resort moved over 310 tables from other properties for a total of 410, split


AGBriefings November 2016