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A positive outlook for the mass segment in the world's largest gaming market, Macau, could be the silver lining for the shares of Hong-Kong listed Sands China, which hit a seven-month low late last week after its parent company, Las Vegas Sands, reported second-quarter earnings that were worse than expected, analysts told CNBC.
"This is a segment (mass-market) that continues to grow and is profitable, so that's why we love shares in both Las Vegas Sands and Sands China at these levels," said Grant Govertsen, Partner & Analyst at Union Gaming Research.
Shares of gaming operators in Macau have taken a hit from the weaker outlook for revenue growth as China's economy slows. Sands China shares are down about 30 percent from a peak hit in mid-April, while Hong-Kong listed rivals, Wynn Macau, a unit of U.S. gaming company Wynn Resorts, and SJM Holdings, founded by Hong Kong billionaire Stanley Ho,have fallen around 38 percent and 24 percent, respectively in the last three months.
Las Vegas Sands reported last week that net income at its Macau unit, Sands China, fell 40 percent year-on-year to $160.5 million in the second quarter because of higher-than-expected opening expenses at Cotai Central, the new Sands' Macau casino that opened in April, and on a $1.01 billion impairment charge on two land parcels.
"We're not worried about the Las Vegas Sands results. If you look at Macau there's no other casino that can touch them in terms of what they have to offer the mass market," said Govertsen.
He adds that Sands China is better positioned than its competitors like SJM to tap the middle class visitors especially from China given the expected growth in the number of hotel rooms, slot machines and table games that it operates directly.
Sands China shares gained some lost ground on Monday, climbing almost 6 percent to HK$23.15 ($2.98). CLSA's Analyst Richard Huang says Sands China is his top pick among Macau gaming stocks. He said CLSA has a buy recommendation on the stock with a target price of HK$33.3.
"Mass market gaming revenue growth has remained robust. The mass gaming segment is also the high-profit margin segment with an Ebitda margin at around 40 percent (versus a VIP gaming Ebitda margin of around 10 percent). And Sands China is the company with the highest exposure to the mass market," Huang said.
According to Fitch Ratings, The VIP segment makes up slightly more than 70 percent of the overall market in Macau and over the last several years has grown faster than the mass market.
"However, we expect that to change over the next several years, with faster growth occurring in the mass market. The mass market will likely make up an increasingly larger portion of the market, as the next wave of supply growth starts to come on line in 2015-2016," Fitch said in a report published last week.
Fitch Ratings last week revised down its 2012 Macau revenue growth forecast to 10-12 percent from 15 percent earlier to reflect a more cautious view in terms of the impact a slowdown in China will have in the near-term.
Macau gaming revenues grew 42 percent in 2011 and 58 percent in 2010, according to Fitch.
By CNBC's Dhara Ranasinghe


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We all know that a traditional game of Tic Tac Toe can end very quickly, and once you master the game, well then most games end in a draw.
What if you added one simple rule which could make the game fun again.
Welcome to Trio Tic Tac Toe!
By limiting the number of O's and X's to just 3 per person, it has opened up the game to new possibilities.
Once you have placed your third piece on the board, you can then move the first piece you placed down and so forth.
Give Trio TicTacToe a go, and see the fun return.
Game Tags
crosses, naughts, oxo, tictactoe

subset: commoncrawl


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|Work on a seat at American's Oklahoma maintenance center
"There is the misperception among the public that the things you do to protect yourself are meaningless because there's nothing you can do. That's not true," Nora Marshall of the National Transportation Safety Board told me recently when I asked her about improvements in airplane seats. "Most accidents we investigate are survivable."
Airplane seats, love 'em or hate 'em, they're doing the heavy lifting when it comes to improving survivability in all the ways airplanes can get knocked around; aborted takeoffs, runway overruns, turbulence, even those plane-to-plane collisions made famous on YouTube.
Seat safety relies on a three-legged-stool so to speak
- the seat structure
- the passenger restraints
- attachment to the aircraft
American is in the middle of a fleet renewal effort on 106 B757s that includes new seats. This leads me to wonder if the seats causing the problem last weekend are new to the B757 or if there have been previous problems with the seat to floor attachment we just haven't heard about.
|Yoshi Ozawa of Jasti with one of his products
|The lab of airplane seat manufacturer Koito's in Numazu, Japan
Koito is responsible for what has to be the biggest and costliest seat manufacturing scandal. Over the course of a decade, Koito falsified test data on the seats it made for Boeing and Airbus throwing into question whether the seats would in fact protect passengers as required.
More than thirty airlines were stuck with airplanes they couldn't use. Continental (now United) had seven planes waiting for seats for months at Boeing's Paine Field. You can read the story I wrote for the International Herald Tribune, here.
More recently, I reported for The New York Times, the concern of some scientists and engineers that current seat testing may not be sufficient to ensure the safety of heavier passengers. This report got folks in the industry talking, I am told. At the most recent Aircraft Interiors Expo larger passengers and what will be done to accommodate them was a subject of much discussion.
All of which is to say that the humble economy class airplane seat, subject of ill thoughts when it is thought about at all, was primed to receive more attention even even before American's 757 troubles began because a lot of thinking goes into where we put our seats - as well it should.