Analysts: US$25 bln opportunity with 20 pct ROIC for casinos opening in 2024

As long as no other restrictions on local gambling arise, analysts at Morningstar are predicting a US$25 billion opportunity in Japan for integrated resorts, with those opening facilities in 2024 able to profit off a predicted 20 per cent return on invested capital (ROIC).
The analysts note the division would be US$19 billion worth in gaming and US$6 billion in non-gaming.
Given its strong balance sheet and strong track record of managing global resorts, the analyst group believes that Las Vegas Sands is best positioned to win a gaming concession, most likely towards the middle of 2019.
Meanwhile, although the group is uncertain about the number of IR locations, which it estimates will be announced during the second half of 2018, the analysts perceive that four IRs could be approved, creating some 20 per cent in ROIC, assuming US$10 billion in capital expenditures for the urban locations with gaming tax and EBITDA (earnings before interest, taxation, depreciation and amortization) margins close to that of Singapore.
Morningstar does not expect much impact on Macau’s industry forecast, given that the territory has already been involved in competition with other Asian gaming regions.
The group further believes that Macau would benefit from the growing middle-income class in nearby regions, while also perceiving that Macau would have a higher-risk of losing clients from areas that are closer to Japan.