Analysis | Decline in gaming stocks could be coming to an end

Investors and gaming analysts are speculating as to whether the positive casino revenue from October is a sign that Macau’s gaming stocks are starting to recover, or that the recent good news will be overwhelmed by the opening of new casino resorts in Cotai.
The Motley Fool, a financial services-oriented media organization, said the October figures indicated that while the market will not enter another phase of “explosive growth”, the fall in gaming stocks could be coming to an end.
October’s gaming revenue of MOP20.04 billion marks a significant improvement on September’s MOP17.16 billion, and reassuringly exceeds the average monthly revenue for the last six months, which sits at MOP18.52 billion.
However, the figures from October were still down by 28.4 percent from a year ago. For some analysts, this marks the first example of good news for gaming revenue in 18 months, and possibly a sign of the upswing that investors have been anticipating. Others, however, point out that the market is still a long way from attaining the pre- slump revenues of early 2014.
A number of new casino-
resorts are expected to open in the next few years, including Melco Crown’s recently opened Studio City, as well as the Wynn Palace, which will open next year. In addition, projects are being planned by Sands Macao, MGM, SJM and Galaxy.
Travis Hoium, of The Motley Fool, warned that unless gaming revenues pick up substantially in the next year, the “added supply could cannibalize existing profits, meaning gaming stocks could fall further.”
Growth in the mass gaming market, along with less dependence on the VIP segment, is expected to bring stability to the market, optimists say. According to an article from the Financial Times, mass gaming is four times more profitable to casinos than VIP gaming. However, in Macau, VIP gaming still constitutes more than half of the market.