GGRAsia – Studio City table allocation above expectations: analysts

Studio City table allocation above expectations: analysts

Oct 08, 2015 Newsdesk Latest News, Macau, Top of the deck

Casino operator Melco Crown Entertainment is likely to get more gaming tables for its majority-owned Studio City casino resort (pictured) in Macau’s Cotai district, than the 150 mentioned in earlier reports, say several investment analysts.

“We believe it is possible that Studio City could obtain new table allocation above our current expectations of [circa] 150,” UBS Securities Asia Ltd said in a note on Wednesday. “A possible initial allocation could be in the range of 200 to 250 tables, higher than the 150 granted to Galaxy Macau phase 2 in May,” wrote analysts Anthony Wong and Angus Chan.

Market rival Galaxy Entertainment Group Ltd opened on May 27 its Galaxy Macau Phase 2 property with 150 new-to-market live gaming tables.

David Bain, an analyst at brokerage Sterne Agee CRT, said in a note on Wednesday that it is possible Studio City “will receive an allocation to host [circa] 250 tables, possibly by year-end, with an initial allocation of [about] 200 tables”.

Macau’s casino regulator, the Gaming Inspection and Coordination Bureau, told GGRAsia that as of Tuesday “no official approval … has been granted” for Melco Crown’s application for new gaming tables for Studio City.

Deutsche Bank AG analyst Karen Tang suggested in a recent note the possibility of the Macau government relaxing the cap on the number of live gaming tables allowed in the market as a support measure to the industry.

Lawrence Ho Yau Lung, co-chairman and chief executive of Melco Crown, said in August that he hoped Studio City could launch with 400 tables. The property – in which Melco Crown owns a 60 percent interest – is set to open on October 27.

A higher table allocation “would seem to match the government’s stated intention to allocate tables relative to the non-gaming amenities of new projects,” said UBS’ Mr Wong and Mr Chan. “In our view, Studio City has some of the most anticipated (and new to Macau) non-gaming attractions of any upcoming resorts. This might also be part of government’s gesture to show support to the industry,” they added.

Studio City will have a figure of eight Ferris wheel, a 300-seat theatre as centrepiece of the resort’s ‘The House of Magic’ shows’, a virtual reality ride called ‘Batman Dark Flight’, and a ‘Warner Bros. Fun Zone’, based on that Hollywood brand’s popular animated characters.

UBS additionally said that a potential low allocation of gaming tables “has been an overhang on Melco Crown, given Studio City’s minority ownership”.

A majority-owned unit of Melco Crown announced in August that it was preparing a “contingency plan” ahead of any gaming table allocation decision by the Macau government for the casino resort.

“We believe any [table] allocation in the 200 to 250 range would materially allay fears of insufficient tables at Studio City,” said Mr Wong and Mr Chan.