Gaming stocks gain as Sands Cotai opens

Gaming stocks posted modest gains Wednesday as the Las Vegas Sands Corp. celebrated the opening of its $4.4 billion Sands Cotai Central casino resort in Macau.

Shares of Las Vegas Sands gained $2.09, or 3.58 percent, to close at $60.49. Wynn Resorts Ltd. posted a $2.18, or 1.78 percent, increase to $124.28, and MGM Resorts International gained 53 cents, or 4.06 percent, to $13.60.

Las Vegas Sands, Wynn Resorts and MGM Resorts all operate casino resort properties in the Chinese territory of Macau. MGM Resorts shares rose on Wednesday after it announced it had launched a consent solicitation for a new round of senior notes due in 2014 and 2017.

Sands China Ltd., a subsidiary of the Las Vegas-based parent company, opened its new Sands Cotai Central hotel, making the resort the latest addition to the company's global operations.

Las Vegas Sands operates The Venetian, Palazzo and Sands Expo Center in Las Vegas along with properties in Pennsylvania, Macau and Singapore. The company's Macau properties generated $1.32 billion in earnings last year, compared with $198.3 million generated in Las Vegas.

Sands chairman Sheldon Adelson, in Macau on Wednesday for the opening of Sands Cotai Central, said Sands China is seeking Macau government approval to add a 3,600-room casino hotel, according to Bloomberg News reports.

With another project, the company's total investment in Macau could total $15 billion.

Adelson also said he plans to spend $35 billion to develop gambling resorts in Spain. The gaming company plans over nine years to build 12 integrated resorts along a mini-Las Vegas Strip in Spain, each featuring 3,000 rooms and targeted toward Eastern European and Russian tourists.

Adelson said it will be decided in the next two or three months whether the development will be built in Barcelona or Madrid, according to Bloomberg. Las Vegas Sands is also looking to build resorts in Japan, Korea, Vietnam and Taiwan.

The Sands Cotai Central property features more than 600 rooms under the Conrad hotel brand, and 1,200 Holiday Inn rooms. The project is scheduled to open an additional 4,000 rooms under the Sheraton brand by March 31, 2013.

Las Vegas Sands has so far invested more than $8 billion in Macau, the company said.

Gambling operations will open in stages. The first phase has 340 gaming tables and 40 rooms for VIP high rollers. Later this year another 200 tables will be added.

"We look toward 2013 as the breakout year for Sands Cotai Central given that it will have its full complement of about 5,800 rooms for most the year, along with its full complement of gaming space, quickly becoming (the company's) number two performing asset in the market behind the Venetian Macau," said Grant Govertsen, an analyst with Union Gaming Research Macau.

Govertsen forecasted total revenues of $1.2 billion in 2012 for Sands Cotai Central, while Sands China was expected to generate net revenue of $6.7 billion this year.

Sands Cotai Central was the 35th casino to open in Macau, the only territory in China where gambling is legal. Fitch Ratings noted the property was opening at a time when the Macau gaming market is growing at a reduced, but still very healthy pace.

"The growth rate slowed to 27 percent in the first quarter, down from 42 percent in 2011 and 58 percent in 2010, but we do not expect a precipitous decline in visitation or gaming trends this year," the ratings agency said Wednesday.

Fitch expects 2012 Macau gaming revenue to grow 20 percent, which "reflects our broader view that economic growth in China will slow to 8 percent this year."

Macau's gambling revenues were $33.5 billion in 2011, far outpacing the $10.7 billion collected by casinos in Nevada.

"We believe gaming authorities in the Chinese-administered territory will remain focused on careful management of supply, as the cap on table games through 2013 limits additional capacity beyond (Sands) Cotai Central," Fitch said in a research note. "We do not expect any major casino properties to open in Macau until 2014-2015."

Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893.