Investors divided over revenue drop

With gambling revenues set to drop for a fifth consecutive month, investors and analysts are expressing concerns, with some even suggesting Las Vegas as a new profit driver, the Wall Street Journal reported.
Investing in casino stocks is usually a simple decision, as investors are usually advised to pursue companies with a bigger exposure to Macau, therefore increasing the chances of higher prospects of revenues.
Hong Kong-based Central Asset Investments portfolio manager Armand Yeung told WSJ that “there’s still a lot of debate” about short-term prospects for gambling in Macau.
Credit analysts also seem concerned about Macau’s expansion plans. Moody’s wrote in a report last month that a decline in gambling revenue will weaken casinos’ ability to repay debt. Moody’s also called out Melco Crown Entertainment unit Studio City Finance, whose new casino project is set to open next year, and is mainly funded by debt.
The credit rating company added that the weak business environment means that it will take longer for Studio City to pay its debt, with the company’s finances also due to weaken for the next one or two years.
As Macau’s gaming world relies mainly on middlemen – the junket operators who bring in gaming high-rollers from mainland China – analysts are struggling to predict gambling revenue with precision.