Will MBS & RWS Produce Fantastic Results?

Posted: July 23, 2010 in Uncategorized

23 July 2010   Friday

Commentary arising from The Business Times report today.

It was reported that Wynn Resorts in Las Vegas faced larger operating losses in 2nd Quarter this year and cash flow remains tight.  To the East, Atlantic City faces no better future as New Jersey State plans to take over the casino district to save the dire financial situation of the state.  This is a bold move just as what the New Jersey State did in 1978 to open up casino regulatory.

Why the situation is so bad? 

The answer: “Is economy, stupid”.

Over to the other side of the globe, will Marina Bay Sands and Resorts World Sentosa go against the tides to perform miracle, deliver supposedly fantastic results quarter upon quarter, to please their creditors and investors? 

The answer: “Is market size, stupid.”

Up to this moment, the gaming market in Singapore remains lukewarm and a still water, without any fanfair.  Now that the RWS buses even have to go into the city state’s HDB residential estates (House Developemnt Board) to fetch people to the IR.  if it is true (according to rumors) that its casino is packed all the time, why resort to chasing after low mass aunties & uncles in the housing estates?  This is Atlantic City model exercised to its extreme.

MBS will have to work harder still for its conventions and conferences booking. The current state of affair, according to industry insiders, is far from satisfactory. What about their casinos? Ask casino director the avearged table utilization rates.

The time is near, for the two IR operators to announce their 2nd Quarter operating results… keep watch.

Afternote:

Huge budget deficts of many US states’  financial situation would force these states government to bet on casinos to help revive employment market  and consumer spending.  More states are expanding casino landscape trying to cope with the low growth economy.  But will this work?  Maybe in the near term…  But it may not be a good news for existing casino operators in Las Vegas and Atlantic City though.   Such move could lead to value destruction for casinos over the horizon.

For sure it will further dilute net cashflow of casino operators in the already crowded gaming industry in the US.  American casino operators such as Wynn, Sands and MGM will need to dig in, with their spread of operations in Asia.  So, are the MBS (Singapore) and Macau Cotai Lot 5 & 6 turn out to be good bets or just liability for Las Vegas Sands Corporation?   On the other side, MGM Grand Macau has a lot to work on to make the turnaround indeed.

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