Macau gaming investors got some long-awaited good news at the end of August when the city logged its first positive year-over-year (Y/Y) monthly gaming revenue growth in more than two years. The surprise number triggered a handful of upgrades for Macau gaming stocks, but CLSA analyst Jon Oh urges investors to be realistic about the limited near-term upside for Macau gaming stocks.

While overall gaming revenue seems to be in the bottoming process, Oh believes pressure on the VIP revenue segment will continue to weigh on Macau stocks. In fact, CLSA has cut its 2017 VIP gaming revenue growth projections from +5 percent to -3 percent.

Overall, CLSA is calling for 2016 Macau gaming revenue growth of -6 percent. The firm is also calling for growth of +6 percent in both 2017 and 2018.

“While the profit implications may be relatively minor, we remain skeptical that the stocks can take their next leg up alongside the negative optics of declining VIP top-line and without a clear beat and raise momentum,” Oh explained.

When it comes to stock picks, CLSA maintains…

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