Melco-Crown has never been in better shape. Regular readers of this newsletter know how much we like the company, for a variety of reasons. Adding to those now is the fact that, starting Wednesday, it will have its shares traded on the Hong Kong stock exchange.

Why should this matter? Why indeed. The company says it has done the listing “by introduction” in order to get on a level playing field with its peers in Macau, all of whom are listed in Hong Kong. Access to wider sources of funding, etc, etc, blah, blah. What we really like about it is that the company now has its shares on its home turf. Readers can take that to mean whatever they like, but the essence of it is that if the much-touted “win-win” relationship between the US and China ever does start to sour to the point that trade spats become more serious, MPEL will have at least one leg on the right side of it and can give up the other leg if necessary.

The numbers are out on the DICJ website: MOP26.85bn, a new record, up 8.4% over the previous record set in August. What more is there to say?

I received an exciting email from David Sofer telling me that Master Zuan Xin materialized briefly earlier this month in Macau from his Confucian Analects translation project to play an exhibition shoe. Such wonderful news and to hear and see Zuan Xin fought another Baccarat fight! Sure was great that The Queen of Clubs was there,too!

We have the great fortune to have exclusive account from The Queen of Clubs on Zuan Xin’s demonstration of the advance learning of Baccarat Great Learning: the XuXu Siyou.  

Click here for a special report of that day where we learn to become one with Zuan Xin’s teaching for 11/11/11 and beyond!

Photo used with permission and copyright Galaxy Macau Entertainment

We’re not going to start bashing our esteemed compatriots in the gaming world who make a living from providing informed opinions. Glass houses and all that, you see. But we cannot let the article in Macau Daily Times today, “Gaming cap to boost electronic tables” go by without comment.

We think Union Gaming’s Macau researcher, Grant Govertsen, and Vegas-based Jonathan Galaviz are people who have put out much valuable insight on Macau in the past. What they told MDT in today’s paper, however, was completely off the mark, in our humble opinion.

First, we do not believe for one moment that Chinese gamblers are going to start sitting down at electronic tables more often, and gamble bigger amounts, just because the government has put in place a cap on the number of live tables. It is going to take the market a long time to get back to the crowded conditions of pre-Sands, circa 2004, before Chinese gamblers struggle to find a seat at a traditional baccarat table.

Second, we don’t think for one moment that the government is likely to be comfortable with an explosion of electronic table games, in any case. The article may have quoted DICJ chief Manuel das Neves as saying there are no plans to cap electronic games, but this is the same man who thinks the market is only going to grow by 30% YoY this year. In other words, he’s missing the bigger picture: the point of the table cap is to refocus the concessionaire’s energy and attention on the non-gaming facilities of their projects, not to get them investing in more gaming hardware that doesn’t require local labor.

Third, we really don’t think it is our place, or anyone else’s, for that matter, to tell the government it should stay out of the way of market forces. As we see it, from the government’s point of view, the first 10 years of reform and liberalization have not exactly gone according to plan. Macau is far from realizing its ambition of becoming a world-class entertainment and leisure destination. Wynn, a name synonymous with luxury and Cirque du Soleil, came in and built a gigantic warehouse for gaming tables and slots, interspersed with a golden tree, a few nice restaurants and fancy shops; MGM, another name synonymous with luxury and Cirque du Soleil, came in behind them and did a carbon copy but with a courtyard instead of the golden tree. SJM has continued to be SJM, focusing on people who come to Macau to gamble and have sex, usually in that order. Galaxy built a wave pool, a multiplex cinema, a nightclub, and 52 new restaurants. Not bad, so far. But only Melco-Crown and Sands China have really spent serious money on non-gaming attractions.

This will likely change quickly and dramatically over the next 10 years, as Galaxy builds out its next phases, Lot 5&6 opens, and the rest of the operators construct megaresorts in Cotai. But it wouldn’t be happening if the government wasn’t demanding it, that’s for sure. And we do agree that it’s in Macau’s best interests that it continue to do so. Stay tuned for more, electronic table games included. Used with permission and copyright IntelMacau.com

Carlo Santarelli and Kelly Knybel, who cover the gaming world from the comfort of New York while glossing over spreadsheets from sources in Macau, reckon we are on track for another record month of gaming revenues in October. Gee, we wonder where they got that idea from. Nevertheless, we concur. All this pain across the border is not showing up in Macau. We have spoken to friends recently who have come back from China more alarmed than before, and yet who walk into the casinos here and are amazed.

We were on the main floor of the Grand Lisboa yesterday and were gob-smacked, to be sure. The few days before October 1 are usually a low period. Nothing could have been further from what we saw last night. And if you don’t believe us, ask Ciaran Carruthers and his mob at www.apgmacau.com to get you the headcounts you need to convince your investment committee that yes, SJM at HK$15.44 is a steal – even before they have figured out their dividend policy and announced details of their Cotai project. Used with permission & copyright IntelMacau.com

Whoops. We missed this yesterday. According to a report in the China Daily, the Macao Dragon ferry operator abruptly ceased operations yesterday, and immediately triggered an investigation into the heavy volume of ticket sales recorded just prior to the shutdown.

The company’s liquidators have promised to do a thorough search for evidence of wrongdoing. Other unverified reports claim as many as 150,000 tickets were pre-sold for the ferry service through Groupon and Beecrazy, two popular group-buying web-based services.

The mind is easily cast back to the abrupt termination of Viva Macau, which also left thousands of passengers fuming. Here’s hoping this incident doesn’t cast yet another black spot on Macau as a tourism destination. Used with permission and copyright IntelMacau.com

My, we are impressed. Just when everyone thought it was impossible to get a new piece of land in Cotai, Steve Wynn pulls one out of the bag.

According to the company’s disclosure to the HK stock exchange this morning, Wynn Macau SA (the gaming concessionaire) and a company called Palo Real Estate (also owned by Wynn) have agreed to the terms offered by the government for the 51-acre plot in Cotai that has had Wynn’s boardings around it for a few years now.

The terms, as outlined, are:

1) Palo will lease the land from the government and pay all the premiums (about HK$1.5bn);

2) Wynn will be “required” to operate a casino on the site;

3) The land must be developed within five years of the concession being gazetted.

Well, we suppose congratulations are in order. This is quite an accomplishment. The only pity is that it couldn’t have been announced last week by Ian Coughlan and Linda Chen as they cut the 5th birthday cake in front of staff.

As mentioned last week, Wynn Macau has been doing relatively well lately, but not as well as its Chinese relatives. Moreover, momentum has clearly started to shift to Cotai, and this will likely accelerate once Lot 5+6 starts to open next April. So even among the three American companies, Wynn had been increasingly seen as more like MGM than Sands China. This announcement, if it really is a firm agreement that just needs to be rubber-stamped before being gazetted, changes everything. It puts Wynn back in the “we have a development plan” game.

Comparisons with Sands China are probably still not really valid, of course. They play in different ballparks. And there is still much to be worked out for Wynn before the clock starts ticking on its new land concession. A formal announcement in the government gazette might still take months. So Lot 5+6 might get quite a head start by opening a few years before Wynn.

However, there can be little doubt that Wynn will not have any of the same problems as Sands has had in getting its own project open. There is major upside ahead for this company once again and we think there are several reasons to believe it can get the project open well before its 60-month timeline expires. Moreover, we think that when it is open, it will be a sensation. It’s time to reassess the company. Again.  Used with permission and copyright IntelMacau.com

Can it really be five years ago that the “new Macau” started in earnest when Steve Wynn opened the classiest joint in town? How time flies. We remember the party well, with the big shot and his then-wife dancing to the tune of “I need a hero” in front of the gyrating fountains.

Today, several billion US dollars in revenues later, the Las Vegas Review Journal wrote a nice report to mark the anniversary by noting that things have never been better for the iconic resort. Respectfully, we beg to differ.

Perhaps this is nit-picking, but things have been better, competitively speaking. While we could fully understand if Wynn himself were to be thanking his lucky stars for the success of his Macau property, especially since Vegas went into the tank in 2008, and he would probably be the first to admit that he never imagined he could be making this much money from it today, we wonder if that’s really enough for him.

It’s not that he hasn’t yet received approval for his Cotai land. We have no doubt that will come, eventually. How could any government be ungrateful to someone who had pledged to donate more than a billion patacas to help build its new university campus in Hengqin? And once the concession is gazetted, we presume Wynn Macau will no longer need to keep adding a paragraph to its interim and annual reports detailing the US$50m payment that needs to be made to an undisclosed third party to relinquish its rights to the land, as the Macao Post noticed this week.

No, it’s not that. It’s that we can’t help but notice how Wynn Macau appears to be in the same boat as its fellow American gaming companies, rowing away as hard as they can while the Galaxy Entertainment Group steams past with smoke billowing from its exhaust, thanks to the recent addition of a second engine in Galaxy Macau.

Now, don’t get us wrong. We know Wynn doesn’t see itself as a competitor of GM. Its mass floor still does a lot more, especially at the high end over in Encore, and its Ebitda margins are a lot wider. But Wynn used to be the undisputed champion of the rolling-chip market. It still does more than any other single property in Macau (if that is a fair way of describing it since the addition of Encore). Nevertheless, Galaxy Macau has turned its owners into the clear leaders of the VIP market in Macau, if you discount all those third-party volumes accounted for by SJM.

Will Wynn be able to regain the title belt when it opens its own property in Cotai? Perhaps. When that eventually happens. But right now, there is no doubt where the momentum lies in this market. And it ain’t with the yanks. Happy birthday, Wynn Macau. Used with permission and copyright IntelMacau.com

The best is yet to come for Galaxy Entertainment Group, which announced its first quarterly results since the opening of Galaxy Macau on May 15 – giving it just 47 days before the books closed. Since then, the property has gone from strength to strength, and now commands around 20% of the market. No other property in Macau has had such a dramatic impact upon opening, except the Venetian in 2007.

Critics might be quick to point out that topline numbers do not a success make, and Galaxy boss Francis Lui would be the first to admit it – in fact, he was the first to admit it at yesterday’s press conference, where he emphasized that his focus is on growing the bottom line. His new property obviously has a long way to go since its first 47 days, which threw off Ebitda of about US$1m per day – a step behind COD’s US$1.7m a day in Q2, and a long stride behind the Venetian’s US$2.8m a day in the same period. But it’s obvious that the only way that number is going is up; the question is just how fast.

From experience of watching this market, we would say it could take a bit longer to catch COD than many might expect. Mass, especially premium mass, is where the potential for margin expansion is most obvious, and Galaxy still has its work ahead of it in this segment. COD, by contrast, is hitting its stride, two years after opening. But it will come for Galaxy, too. And in the meantime, VIP marketing boss John Au is leaving his neighbors in his rear-view mirror, accounting for more than 60% of all new VIP volumes coming into Macau since the property opened.

That’s even before he opens another three rooms, or before the hotels are fully operational (another 800 rooms coming online by year-end), or before the China Rouge nightclub opens (important for VIPs).

Moreover, what most surprises us about the group’s performance so far is the boom that’s going on at StarWorld. We had been expecting the peninsula property to be seriously cannibalized by the Cotai resort’s opening. Instead, it is up on all counts: VIP, mass and non-gaming. Very impressive.

Indeed, as mentioned, we think there is a lot of fairway ahead of Galaxy right now. Until Lot 5+6 opens next year, in fact, we would not be surprised if Galaxy continues to grow its market share, perhaps all the way back to where it was when the Venetian opened, around 22-24%.

Why? Well, primarily because of its partners – Galaxy has the best relations with Sun City and Neptune of all the Macau casinos, and they currently appear to be in the ascendant. All the rest of their junket operators are solid, too.

But also because we think the management team has room to improve. To be sure, if this is how well they can perform in driving the top line so soon after opening, then it says something about how much they have to work with in improving margins. Starting with win-hold on mass – 17%, compared to the more normal 24% elsewhere – there is obviously work to be done in squeezing costs out of the system. But it’s like they say in the classics, the best way to make a small fortune is to start with a big one. As their bigger next-door neighbors are finding to their dismay, no doubt, you can’t grow your bottom line much if your top line isn’t growing.

And then there’s the real estate. We wouldn’t be surprised if Galaxy starts expanding asap, given that it has so much room to grow into. Watch this space. And stay tuned. Used with permission and copyright IntelMacau.com

I really like the look and feel of the Galaxy Macau experience. The design is on par with expectation of such a mega resort and here are some photos I took during a brief visit on a hot August afternoon. This is another children friendly casino-resort and you can see many families check-in for the last weekend of the summer holidays.

Also, Galaxy Macau hosts the recent Volleyball World Grand Prix featuring the 8 strongest teams of USA, Japan, China etc. I even catch the Team USA volleyball athletes walking in the lobby from their lunch.  Within less than 50 days of openings,  report that this establishment already commands 20% of the gaming market. This is simply incredible!

Main lobby with a gigantic ice-sculpture fountain for regular show times

The pretty Galaxy Macau guest relation ambassador