You Can Still Make a Mint on Macau
Similar to retail businesses, casino facts and figures are constantly being released, allowing investors to keep a close eye on their investments and stay informed on a nearly weekly basis. For players such as Las Vegas Sands and WynnResorts , the now-old growth story of Macau is still impressing with double-digit growth figures and more. Macau Business recently reported that revenue in the region is set to top 18%-22% for September. Things may level off later on, as China approaches its Mid-Autumn Festival, but for a period of global economic tepidity, it is compelling to see these cash-printing businesses continue their big-time growth in the new Vegas. Is there still time for you to cash in on the Macau craze?
Bet on it
Macau's most explosive growth days may be behind it at this point, but that won't stop the numbers from climbing at a very attractive clip. Add in the fact that Beijing is intent on boosting economic growth with subsidies to encourage consumer spending, and you have a well-supported thesis for a few different casino plays. At this point, Macau generates six times the gambling revenue that Vegas brings in. In the second quarter, for example, Wynn saw $401 million in Las Vegas gambling revenue. Compare that with the $930 million hauled in at the former Portuguese colony.
Wynn is a stellar organization run by the best in the industry. Though some complain that Steve Wynn's new take on Vegas deleted the old-school charm of the town, it has driven the place to new highs. Furthermore, it's exactly what works for the China affluent -- glitz, glamour, and spending.
The company is in the midst of building another resort in Macau, costing an estimated $4 billion and called the Wynn Palace. All of Wynn's resorts have created iconic themes and installations -- from the Mirage's Volcano to the dancing Bellagio fountains. Wynn Palace will have a floral theme and will likely become the hottest spot on the Cotai Strip when it opens around the Chinese New Year in 2016. Wynn's near flawless execution in opening new resorts and casinos spells good fortune for the company's latest project -- not to mention investors.
Everyone's a winner
Though Macau's draw has been mainly to wealthy Asians, the Chinese government is pouring money into the region to develop museums and theme parks, in addition to better transportation and infrastructure. The idea is to bring in mass-market tourism and appeal to multiple socioeconomic classes. With only increasing exposure to the region, Wynn, Las Vegas Sands, MGM Resorts, and other big-name American casino plays are only going to benefit.
A decreasing reliance on Vegas numbers and long-term favorable growth in the Chinese middle class (and, of course, the wealthy) will keep these companies pushing through highs. As long as valuations don't go too far in favor of the house, consider an investment in Wynn or the other top contenders.
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