Gaming | Morgan cuts gaming sector to “cautious”

Morgan Stanley has changed its rating of Macau’s gaming sector from “in-line” to  “cautious”. The research house attributes the downgrade to regulatory pressures, oversupply concerns, and negative earnings revisions, among other factors.
Morgan Stanley expects the second half of the year to bring improvement in gaming revenue. However, it may not be enough to increase performance given the higher than expected operating expenses and lower than anticipated demand.
The finacial researcher also said that recent data on hotel room rates and the occupancy drop in Macau is concerning, since a 50 pct increase in the number of hotel rooms is expected over the next 18 months. The research house has cut its estimation of 2015-17 industry earnings across the board by 5-18 pct, based on weaker industry revenue growth.
Separately, Citigroup has released a report stating that it has raised the Macau gross gaming revenue (GGR) forecast for April to MOP18-19 billion, and that the GGR is expected to remain stable at this level for the foreseeable future.