Chinese clamp boosts Packer, by Peter Gosnell - The Daily Telegraph - 6th May 2008

The Chinese freeze on Macau-centric casino developers is being touted as good news for gambling mogul James Packer and his Asian gambling play, Melco PBL Entertainment.

Analysts said yesterday the Chinese Government's recent decision to place a moratorium on new casino construction would limit competition in the freewheeling former Portuguese enclave.

They said that when combined with the natural enthusiasm of Chinese punters and Melco's recent improvement in attracting gamblers through its doors, the value of Melco PBL Entertainment shares could rise by 50 per cent over the next few years.

"This is a very interesting story and one worth revisiting," Philip Ehrmann, an Asia specialist and long-term Macau sceptic at Jupiter Asset management in London said yesterday.

Mr Packer owns a 37 per cent stake in Melco PBL Entertainment through Crown Ltd, the locally-listed holding company which holds his gambling interests.

These include Crown Casino in Melbourne, Burswood Casino in Perth, his Betfair Australasia joint venture and stakes in Canada's Gateway group, Aspinall Holdings (Jersey) Holdings, Fontainbleau Equity Holdings, the LVTI joint venue in Las Vegas and the soon to be ratified purchase of Cannery Casino Resorts, which operates four casinos in Nevada and Pennsylvania.

Melco PBL Entertainment - which plans to change its name to Melco Crown Entertainment at an annual meeting of shareholders later this month - owns and operates the Crown Macau Casino in Macau.

Mr Packer and his Melco co-founder Lawrence Ho are building the $2.3 billion City of Dreams casino resort and have plans for a combined casino, resort and residential complex on the Macau peninsular waterfront.

The upbeat appraisal represents a solitary gleam among a sector currently in the shadow of a global resources boom.

Melco and several rivals have been hit hard in the past year as more casinos opened in Macau, increasing competition and driving down margins as they fought for customers.

And in the US, shares in Vegas Sands and Wynn Resorts have been pounded by fears of a weak US economy.

Locally the news has been equally gloomy, with analysts downgrading their earnings forecasts for poker machine maker Aristocrat as higher costs eat into declining sales volumes.

Meanwhile, Tabcorp Holdings and Tatts Group have yet to recover from the blow dealt last month when the Victorian Government decreed their duopoly controlling the state's 27,500 poker machine licenses would end when their permits expire in 2012.

In first half 2008, revenue from gaming contributed 25 per cent of Tabcorp's earnings before interest and tax.

Both parties are believed to be still considering legal advice in respect of more than $1 billion in compensation they believe is now owed to them by the Victorian Government.

(Credit: The Daily Telegraph)

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