US: Big casino operators will report second quarter profits up

26.07.2005, Lesen Sie hier den Bericht über «US: Big casino operators will report second quarter profits up».

According to Wall Street experts

(US).- According to Wall Street predictions, the Big Six gaming companies - Boyd Gaming, Harrah’s Entertainment, Las Vegas Sands, MGM Mirage, Station Casinos and Wynn Resorts- should report second- quarter profits more than 50 percent higher than a year ago when they start posting financial results this week.

Boyd Gaming Corp., Harrah’s Entertainment, Las Vegas Sands Corp., MGM Mirage, Station Casinos and Wynn Resorts Ltd., are likely to have tallied more than us$ 400 million in combined net income, Wall Street analyst said.

Wall Street bankers said the Big Six are likely to report revenue of us$ 4.5 billion in the 2005 second quarter, up from us$ 3 billion a year earlier and just shy of the record first-quarter revenue of us$ 4.7 billion.

The companies likely will report combined profits for the quarter of us$ 440 million, up from us$ 273 million in the second quarter of 2004, and cash flow - earnings before interest, depreciation, taxes and amortization - of us$ 1.3 billion, up from us$ 929 million in the first quarter of 2004.

Deutsche Bank analyst Marc Falcone said the MGM Mirage merger with Mandalay Resort Group and the Harrah’s Entertainment merger with Caesars Entertainment, coupled with strong trends in the Las Vegas locals and regional markets, explain the improved performance. "Overall, it was a strong quarter, with (Las Vegas) Sands benefiting from strong trends in Las Vegas and sequential improvement in Macau and Wynn (Las Vegas) exceeding expectations," he said.

Las Vegas Sands, a newcomer to the Big Six since going public early this year, led in growth. "Macau Sands (which opened off the coast of China a year ago) clearly made the difference. Macau is amazingly strong and Macau Sands is doing as well as any property in the gaming universe," Deutsche Bank analyst Andrew Zarnett said.

He said The Venetian, which Las Vegas Sands owns and operates, is benefiting from the same long- term growth trends that are aiding all Las Vegas operators and from foot traffic from Wynn Las Vegas. "The Venetian once stood at the end of the Strip. Now it stands at the center because Wynn is pulling thousands of people a day up to the new end of the Strip," he said.

Zarnett said each of the other major gaming companies, all based in Las Vegas, did well individually in the quarter. And, he said, there’s room for an upside surprise from Boyd Gaming Corp. and Kerzner International Ltd., a Paradise Island, Bahamas, company that’s not in the Big Six. "The numbers from MGM and Harrah’s are more difficult to interpret because they just completed their mergers (with Mandalay Resort Group and Caesars Entertainment respectively)," he said.

"Especially for companies that are Las Vegas-centric, visitation, occupancy and room rates were all up," Zarnett said. "Add to that, the US economy is performing as ell as it has at any time in the past four years."

Bear Stearns gaming analyst Joe Greff said in an investor advisory that the Las Vegas locals market is particularly robust, driven by population increases in Clark County, low unemployment in Las Vegas and the strong real estate market. Falcone said the growth is likely to continue well past the end of the year, especially with synergies from the big mergers and other growth opportunities.

"We have a good conviction the growth story remains in place continuing into 2006, and we think 2007 will be a breakout year for the gaming industry because of all the new products coming online," he said.

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