* Sees "extremely good" Q2, eyes Japan for expansion
* Sees Japan decision soon on legalising casino gambling
* Q1 net quadruples on strong Macau performance
* Shares slip 1.4 pct, in line with broader market
(Recasts, adding CEO interview)
By Sui-Lee Wee and Kei Okamura
HONG KONG, May 11 Macau-based Sands China
(1928.HK), the world's second-most valuable casino operator,
has its sights on expanding into Japan, which it predicts could
become Asia's largest gambling market.
In Macau, the firm's second-quarter outlook is "extremely
good," CEO Steve Jacobs told Reuters on Tuesday after the firm
posted first-quarter earnings that quadrupled from a year ago
on a strong performance in the former Portuguese enclave and
strict cost controls.
"All indications are it's going to stay as strong as it is
today," Jacobs said, referring to the outlook. "In a month
where the market was up by about 70 percent, you've got to
assume that we did fairly well."
Macau, the world's largest and fastest-growing gambling
market, generated record gambling revenues in April, up 70
percent from a year earlier. [ID:nTOE64302K]
Sands, which has been approached by local gaming firms in
Japan, is eager to move into a market with the potential to be
Asia's largest gambling market, Jacobs said.
For Graphic on Macau casinos:
For gaming revenue Graphic: link.reuters.com/hux68j
For StarMine comparative data: r.reuters.com/kuk53k
Expanding in Asia beyond Macau has become important for
casino operators such as Sands and Wynn Resorts (WYNN.O), which
worry about Beijing's erratic travel restrictions on mainland
Chinese visiting Macau, the only place in the country where
casino gambling is legal.
Japan has long debated legalising casino gambling and could
make a decision soon as it looks to the example of Singapore,
which recently opened two major casino resorts, Jacobs said.
"My own personal view is that their decision to go ... or
not to go will be made sooner than most people think," he said.
"I think what they are trying to do is to find an element
to drive tourism -- so they are looking more to integrated
resorts as opposed to a casino resort or a casino only."
Sands China's parent Las Vegas Sands (LVS.N) opened its
$5.5 billion Singapore casino resort, the world' second-most
expensive, late last month. [ID:nSGE63Q08X]
Japan has made slow progress on allowing casinos, partly
due to fears they could trigger social problems.
If Japan moves to legalise casino gambling, the first
casino could open by around 2014-15, said Jacobs, who was chief
executive of an international management services firm before
he joined Las Vegas Sands in March last year.
Others are less optimistic.
"Japan would be the Holy Grail of gaming in Asia," said
Aaron Fischer, head of CLSA's Asian gaming research, adding
that a large appetite for gambling and a high average income
would create strong demand for casino operators.
"But CLSA has been talking about gaming legalisation in
Japan for the last five years, so we're not holding our
NO COST OVERRUNS
Cost overruns for Sands China's next mega casino resort in
Macau's Cotai Strip -- billed as the next Las Vegas Strip --
are "a low probability," Jacobs said, adding that $1.7 billion
of the financing is "already in the ground."
Analysts fear that a possible move by Macau's government to
restrict the number of non-resident workers on construction
projects could result in cost overruns or project delays for
The project, whose first two phases will cost $2.35 billion
to develop and is set to open by the third quarter of 2011,
will house the world's biggest casino as well as Shangri-La,
Traders and Sheraton hotels.
They would complement Sands China's three existing Macau
casinos, including the massive Venetian Macao. [ID:nTOE63I065]
Analysts say Sands China is their favourite pick among
Macau casino stocks due to the firm's aggressive expansion
plans and exposure to the mass-market gambling segment, which
is more resilient to economic turbulence than the VIP gambling
Sands China, whose rivals include Wynn Macau (1128.HK) and
Melco Crown Entertainment (MPEL.O), reported January-March net
profit of $110.51 million versus $26.66 million a year ago.
The results were widely expected as Sands China had
reported its first-quarter profit of $113.3 million, according
to U.S. GAAP standards, last week, together with Las Vegas
By 0510 GMT, Sands China shares were down 1.4 percent,
tracking a broad decline in the benchmark Hang Seng index
The stock has risen about 17.5 percent this year,
underperforming Wynn Macau, which is up by around a fifth.
(Additional reporting by Donny Kwok and Stefanie McIntyre,
Editing by Don Durfee and Dhara Ranasinghe)