Macau casino faces delay in opening - Friday 17th of October 2008

JAMES PACKERS Macau casino joint venture has been tipped to delay the opening of its $2.4 billion casino and hotel project by three months amid a downturn in the worlds largest casino market.

The company is relying on the City of Dreams to win back some of the 10 per cent market share it has lost since April, and to climb back to its perch as the third most successful casino operator.

A gaming analyst at Merrill Lynch, Daniel Renshaw, said in a note to clients yesterday that the 1400-room hotel and 500-table casino was likely to be unveiled on July 1, instead of at the beginning of April.

Crown said at its half-year results in August that it would open City of Dreams in the first half of next year, to allow for delays.

It does not want a repetition of of its experience with its first casino-hotel project in Macau, which opened in May last year without all its gambling rooms in operation.

Mr Renshaw also noted that the 83 per cent slump in the share price of the joint venture, Melco Crown, in the past year could mean Crown has to write down the value of its share in it.

Melco Crown, which trades on the Nasdaq, hit $US18.15 ($27.28) a year ago. It is now trading at $US3.01. Its slump is twice as steep as the broader index, which has fallen 42 per cent.

"With [Melco Crowns] share price finding no floor, the possibility of a write-down continues to lurk," Mr Renshaw said.

City of Dreams has experienced cost blow-outs during construction and is facing difficult gaming conditions. Rival casino operator Wynn said this week that Macau revenues fell as much as 45 per cent in the third quarter, while its VIP revenues were down 23 per cent.

Macau hotels are also bracing for a slide in room rates as travel budgets fall and gamblers stay home. In figures released yesterday, gaming revenues across Macau slumped 4 per cent in September, compared to growth of up to 67 per cent earlier this year. Macau officials expect revenues will be flat until March.

Mr Renshaw cut his target price for Crown by 10 per cent to $8.78. Crown shares yesterday closed down 46c at $6.44.

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