The long-term growth story in Macau remains intact, but share prices of casino operators may already fully reflect 2017 earnings. According to Bernstein analyst Vitali Umansky, the huge run Macau stocks have been on in the past year now has the stocks trading in-line with medium-term growth expectations in Macau.
“While we continue to have a positive outlook on the Macau gaming industry, for most of our coverage universe, valuations have largely caught up with near and medium-term prospects, especially in light of continued risks the sector faces (tied largely to China policy and regulatory impact on Macau and unsustainable drivers helping VIP),” Umansky explained.
Analyst’s Take
Bernstein is projecting mass market gross gaming revenue (GGR) growth of +12 percent in 2017 and VIP GGR growth of +3 percent. For the casinos, the firm sees +14 percent EBITDA growth in 2017.
In the long-term, Bernstein is projecting Macau GGR compound annual growth (CAGR) of +8 percent and EBITDA CAGR of +12 percent.
Given the roughly 60 percent rally in Macau casino stocks in the past year, Bernstein has downgraded the China unit of MGM Resorts International MGM 0.31% from Outperform to Market Perform.
Bernstein’s top two Macau plays are…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
