Gambling revenue in Macau leapt 48% in February from a year earlier, government statistics issued Tuesday show, as mainland Chinese visitors to the territory helped push revenue to another record high.

Gambling revenue rose to MOP19.86 billion (US$2.47 billion) during the month, from MOP13.45 billion a year earlier, according to data from Macau's Gaming Inspection and Coordination Bureau. The total for February surpassed the previous monthly record of MOP18.88 billion, hit in December 2010.

The record revenue haul came despite Beijing and Macau officials urging the city to diversify its economy away from the lucrative casino business, efforts by the local government to tame the industry's growth, and investor concerns China's tightening measures could negatively impact gambling revenue in the city, the only place in China where casino gambling is legal.

However, Credit Suisse analyst Gabriel Chan said further tightening by Beijing is unlikely to be a problem for Macau's casino operators over the next few months.

"I don't think China's tightening measures will have any meaningful impact on Macau's gambling revenue for the next three to six months as it will take time for China to absorb its excess liquidity," he said. "Plus, in the initial tightening cycles, VIPs tend to take even more money out of China as they seek better returns on their assets."

Macau's gambling revenue has made a dramatic recovery since the end of 2009, as the city came roaring back from the global economic downturn, a swine flu outbreak and China visa restrictions in the first half of 2009.

Revenue growth in February was faster than the 33% rise recorded in January, but slower than the 58% surge for all of 2010.

CLSA analyst Aaron Fischer said the investment house is maintaining its estimate of a 30% increase in gambling revenue this year despite the higher-than-expected growth rates in the first two months of the year because of a high comparison base effect in the second half and the possibility of "some form of tightening on the VIP side."

He said consensus growth estimates are closer to 20%-25%.

Among Macau's six casino license-holders, tycoon Stanley Ho's SJM Holdings Ltd. (0880.HK) continued to lead the market with a 32% share, followed by Sands China Ltd. (1928.HK) with 18%, according to a person familiar with the matter. Both operators' shares were steady from the previous month.

Melco Crown Entertainment Ltd. (MPEL), co-chaired by James Packer and Lawrence Ho, and Wynn Resorts Ltd. (WYNN) unit Wynn Macau Ltd. (1128.HK) each increased their market shares by around one percentage point to 15%, the person said.

MGM Macau, a joint venture between Pansy Ho and MGM Resorts International (MGM), was in fifth position with a market share of 11%, about one percentage point higher than in January, the person said, adding Galaxy Entertainment Ltd.'s (0027.HK) share fell to 9% from 13% last month after having an unlucky month.

Shares of Macau casino operators rose sharply in Hong Kong following the latest data.

Galaxy Entertainment, controlled by Hong Kong tycoon Lui Che Woo, and SJM Holdings led the gains, rising 11.2% to HK$11.16 and 8.2% to HK$12.40, respectively.

In a report Monday, Bank of America Merrill Lynch analyst Billy Ng wrote that the recent correction in Macau gambling operators' shares, particularly those of Galaxy and SJM, provided a good entry point for investors.

He said shares of SJM and Galaxy were both down about 20% from their peaks in the middle of January.

-By Kate O'Keeffe, Dow Jones Newswires; 852-2802-7002; kathryn.okeeffe@dowjones.com
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