DealZone

Wynn’s sure thing in China

October 9, 2009

Nobody ever got poor betting on Chinese demand for gambling, though the big players in Macau have seen a few busted flushes along the way. With more than a billion fatalists eager to hit the tables, and only one place to do it (Macau is China’s only legal gambling venue), it’s not hard to see the case that Wynn Macau and Las Vegas Sands are making for Hong Kong investors. It’s the same story Hong Kong and Macau magnate Stanley Ho has made for decades.

Wynn Macau’s $1.63 billion Hong Kong IPO, the sixth-largest in the world this year, was considered rich, despite the hype and that “sure thing” ring. After all, the colony is covered with half-finished projects and other remnants of the last time this too-good-to-be-true investment turned out to be what it was.

Wynn Macau shares ended 6 percent higher on Friday, valuing the casino giant at $6.9 billion. The solid debut bodes well for rival Las Vegas Sands, which plans to raise up to $2 billion in a Hong Kong offering for its Asia assets, most notably in Macau.

Macau gambling revenues hit a monthly high of $1.4 billion in August, a faster-than-expected recovery compared with Las Vegas, and revenues are believed to have been stronger still in September as China relaxed restrictions on its citizens crossing into Macau from Guangdong Province, reports Sui-Lee Wee.

Analysts say the IPO was perfectly priced and that the twin dangers of competition from other potential gambling hotspots in the region and the inscrutable winds of Beijing’s political climate could turn the tables quickly on these investments. Place your bets.

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