Analysts seem to be favoring MGM Resorts (MGM) stock over the other major casinos. Of the 17 analysts tracking the stock, 16 of them recommend a “buy.”
Macao’s casinos reported their seventh consecutive month of revenue growth in February 2017. Casinos’ February revenues rose 18% year-over-year (or YoY) to ~$2.9 billion.
As of January 3, 2016, the Macao casino industry valuation stands at 12.6x. This valuation is lower than the industry average valuation of 12.05x since February 2008.
Macao casinos’ $28-billion investment in integrated resorts will change the city’s gaming. Capacity additions should increase the number of slot tables too.
Wynn Resorts opened its $4.1 billion Wynn Palace on August 22, 2016, and this may have directly contributed to Macao’s casino industry recovery in August.
Macao’s unemployment rate reached 7% in 2000. Growth in tourism and gaming helped curb high rates, bringing the average down to ~3.9% from 1996 to May 2016.
Macao, the largest gaming hub in the world, has seen big growth in the past decade but has also seen declines since China imposed restrictions in 2014.
As of December 10, 2015, the Macao casino industry’s valuation stands at 12.9x. This is close to the industry average valuation of 12.5x in April 2008.
Prudential (PUK), UBS Group (UBS), Nissan Motor (NSANY), Credicorp (BAP), and Melco Crown Entertainment (MPEL) are among the AB International Growth Fund’s 71 holdings.
Macao has seen extraordinary growth in the past decade and a half. It has also seen a similar fall ever since the Chinese government imposed anti-corruption restrictions in 2014.
The Las Vegas Sands is focusing on controlling costs in the already weak Macao region. It generated better cash flows as it focused on the higher margin mass and non-gaming segments.
Wynn Resorts’ (WYNN) third quarter numbers missed most Wall Street analysts’ estimates. The company’s revenues for the third quarter fell to $996.3 million.
The third quarter earnings call from Wynn Resorts disappointed investors. The company’s already weak stock fell by more than 7% in after-hours trading.
The peers are way ahead of Wynn Resorts based on the price-to-sales ratio. The ETFs outperformed Wynn Resorts based on the price movement and PE ratio.
As of October 12, 2015, Las Vegas Sands’ (LVS) valuation multiple stands at 11.7x. This is lower than its average forward EV-to-EBITDA multiple of 16.14x.
Las Vegas Sands is expected to continue reporting grim earnings in 3Q15.
Analysts expect LVS to post a year-over-year decline in earnings per share and revenue, driven by weakness in business.
The gaming industry has been heavily dependent on Macao, and the Chinese economy’s troubles don’t seem to be going away soon. Companies are finding new destinations in Japan and Korea to develop the next Macao.
Las Vegas Sands (LVS) stock remained relatively flat or slightly lower in July and August. But the steepest fall came in September, dragging the stock down about 18% in a short time span.
Las Vegas Sands (LVS) had a difficult second quarter, missing both top line and bottom line estimates. The top line fell 19.4%, while operating income fell 28.3%.
After witnessing a decade of exceptional growth in revenues, the Macao casino industry is going through its worst fall with July marking 14 straight months of declining gaming revenues.
A major percentage of visitors at the Macao casinos are from China. In May 2015, the visitors from China contributed to about 66% of the total arrivals.
Macao’s gaming revenue per visitor was at 999.6 Macanese pataca in May 2015—a rise of 6% from 942.4 in April 2015. This came after a huge fall in April 2015.
The casino industry in Macao witnessed its 13th straight month of falling revenue in June 2015. For June, the revenue fell by about 36% YoY to $2.17 billion.
The Fidelity China Region Fund Class C (FHKCX) stands out as the clear winner in risk-adjusted performance. It continues to dominate its peers with a Sharpe ratio of 3.3.
Macau’s restriction on using China UnionPay debit cards at casinos to curb illegal money flow could be a factor in February’s drop in gambling revenues.
MGM’s share price hasn’t been impacted much by the anti-corruption campaign in China. The campaign took a toll in 3Q14. Its business has ~33% exposure in Macau.
Wynn Resorts’ (WYNN) share price plummeted 6.1% immediately after its 4Q14 results. However, the share price should gain momentum once new resorts are open.
Rolling chip volume refers to the amount of non-negotiable chips wagered and lost by the rolling chip market segment. It’s largely represented by VIP players.
Established in 2004, Melco Crown Entertainment (MPEL) owns, develops, and operates casino gaming and entertainment resort facilities. It’s focused on Asia.
WYNN’s hotel occupancy increased at Macau and Las Vegas in 4Q14. Macau had 98.6% and Las Vegas had 82.1% compared to 96.7% and 80.8%, respectively, in 4Q13.
WYNN’s adjusted property EBITDA fell a whopping 29.3% year-over-year to $352 million, the biggest year-over-year fall since the second quarter of 2009.
WYNN’s VIP table games drop in 4Q14 was $20.7 billion, 39.9% lower than 4Q13. Drop is cash and net markers issued and deposited in a gaming table drop box.
Las Vegas Sands’ adjusted property EBITDA at Marina Bay Sands in Singapore doubled, reaching a property record of $518.5 million, up ~100% year-over-year.
Las Vegas Sands has a greater forward dividend yield than the S&P 500’s (SPY). As of January 27, LVS’s 2015 forward dividend yield was 4.6%. SPY’s was 2.1%.
Sands China Ltd. (or SCL), a subsidiary of LVS, dominates the hotel market in Macao with 9,277 hotel rooms, or 38% of Macao’s four- and five-star hotels.
Las Vegas Sands will burn huge cash in 2015 to fund development of The Parisian Macao in 2015 and 2016 and the St. Regis property at Sands Cotai Central.
Las Vegas Sands’ revenues for 4Q14 were $3,416 million, down 6.6% year-over-year, mainly due to a 15.9% year-over-year decrease in the Macao operations.
Morgan Stanley upgraded MPEL shares to an overweight rating in a research note issued to investors on January 5, 2015, with a revised target price of $28.
Price performance Let’s explore the five-year share price performance of Melco Crown Entertainment (MPEL) relative to its peers, as well as the broader market that includes SPDR S&P 500 ETF (SPY). Share prices of gambling stocks collapsed heavily over the last three to six months. This drop largely resulted from the Chinese government’s crackdown on corrupt officials, which negatively […]
