Analyst: Casinos to feel minimal impact from quake


Casinos will feel a minimal impact by the earthquake in Japan, according to a veteran gaming industry analyst.

Those hotel and gaming companies operating in Macau and Singapore all saw shares close lower on Monday, as investors remain nervous the earthquake will affect visits to those markets.

"Given the events in Japan ... we believe the potential for investor concerns regarding the impact of the earthquake and tsunami on gaming operations in Macau and Singapore exists," said Carlo Santarelli, senior analyst with Wells Fargo Securities. "That being said, we do not believe these unfortunate events will have a meaningful impact in gaming operations in either market."

As it relates to Macau, 1.7 percent of visitation to the market comes from Japan, according to Santarelli's research report.

"Given our belief that the majority of the Japan gaming business is VIP play, we would expect any impact to be isolated to the VIP segment of the market," he said.

But even if there is a long-term reduction in Japanese tourism, it will not have a "meaningful impact" on gross gaming revenue or a significant impact to gaming operations.

Singapore visitation numbers from Japan are higher, at about 5.1 percent of the total market. Santarelli didn't expect a "meaningful impact to gaming operations."

The most pertinent issue related to gaming, is how the earthquake and tsunami will impact the process for legalizing gaming in Japan.

"While we don't care to speculate on how these events will impact the process in Japan, we do believe investors may come to the conclusion that the need to raise funds for Japan will have more urgency post these tragic events," he said.

MGM Resorts International lost 25 cents, or 1.91 percent, to close at $12.81, while Las Vegas Sands Corp. slipped 19 cents, or 0.49 percent, to $38.43. Both companies are listed on the New York Stock Exchange.

Wynn Resort LTD. lost 11 cents, or 0.09 percent, close at $123.88 on the Nasdaq.

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

 

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