Gaming stocks post gains in Hong Kong, NY

Shares of Macau’s major gaming companies are significantly up in Hong Kong and New York trading this week, responding to the gross gaming revenue (GGR) take in February that marked a two-year high and beat most analysts’ expectations.

Macau GGR reached MOP23 billion (USD2.9 billion) at the end of last month, the highest amount since January 2015 when MOP23.75 billion was recorded.

Stocks consequently jumped in New York trading yesterday, with MGM Resorts (+2.28 percent), Wynn Resorts (+7.12 percent), Melco Crown (+5.13 percent) and Las Vegas Sands (+4.31 percent) reacting well to the unexpected double-digit GGR rise of 17.8 percent.

Las Vegas Sands and Wynn Resorts are heavily exposed to Macau, having both opened large integrated resorts in Cotai during the second half of 2016. MGM currently has just one integrated resort in the MSAR but will be is looking to open a second later this year.

Gaming operators also posted strong gains in Hong Kong’s Wednesday trading. Galaxy Entertainment, Wynn Macau, Sands China and MGM China each recorded around 3 to 4 percent growth in their Hong Kong-listed share prices.

While some gaming operators continued to record gains yesterday, others saw their positions consolidate slightly. Wynn Macau, Melco International and SJM Holdings were up 0.83 percent, 0.8 percent and 0.32 percent respectively by the end of the day, but Galaxy Entertainment, Sands China and MGM China slipped 0.25 percent, 0.89 percent and 1.09 percent respectively.

The Hang Seng Index complemented the rise, adding around 0.2 percent in value, which the Asian Nikkei Review accredited to the positive news coming out of Macau together with improving sentiment towards Chinese manufacturing data.

Uncertainty over gaming stocks temporarily rose to a new height last month when a gauge of Macau’s six concessionaires’ stocks published by Bloomberg showed trading conditions reminiscent of those preceding the 2014 crash. Moreover, falling year-on-year growth in the city’s GGR over the previous three months – November (+14.4 percent), December (+8 percent) and January (+3.1 percent) – sparked fears that the gaming recovery might be short- lived.

Macau-based gaming analyst Grant Govertsen told the Times last week that the fears were unfounded.

“The reality is that these stocks are still about half of what they were in 2014,” he said. “What we are seeing makes sense for a market [seeing] growth again.” Analysts at JPMorgan described last month’s revenue momentum as “remarkable”, while those at Bernstein – as well as representatives of Macau’s junket promoters – attributed the gain to a one-fifth rise in the VIP segment in the last quarter.

Looking more to the long-term, Richard Huang told Reuters on Wednesday that, “while it is hard to call last week’s results a trend, the industry has showed clear signs of stabilization.”