According to a recent report, Credit Suisse analysts believe the Macau gaming market is near a bottom. Analysts are recommending investors start slowly building positions in gaming stocks.
After a 6 percent drop in gaming revenue in 2014, Credit Suisse is forecasting a 13 percent increase in revenue in 2015. Analysts see a potential increase in the efficiency of large junkets leading to more VIP gaming in the upcoming year.
Stock Picks
According to the report, Q2 2015 will mark the turning point for Macau-exposed gaming stocks. Credit Suisse rates the stocks of Melco Crown Entertainment MPEL 0.36% and MGM Resorts International’s MGM 1.35% MGM China at Outperform. Las Vegas Sands Corp.’s LVS 1.74% Sands China, Galaxy Entertainment Group, and SJM Holdings Limited are rated Neutral. Finally, Wynn Resorts, Limited’s WYNN 2.2% Wynn Macau and Macau Legend are rated Underperform.
A Tough 2014
This past year was tough for the Macau gaming market. A government crackdown on Macau currency law violations and VIP junket operations spooked many wealthy gamblers, and gaming revenue in Macau started to plummet. Weakness in the Chinese economy and political protests also likely contributed to the unwillingness of gamblers to make the trip to Macau from mainland China in the second half of 2014.
Other Analyst Action
Earlier this month, Morgan Stanley…
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