How Macau Growth Could Turn Positive By June 2016

As investors await the final January revenue numbers out of the Macau gaming industry, Morgan Stanley has released a new report claiming that revenue growth could return to Macau as soon as June 2016.
 

Analyst Praveen Choudhary believes that December’s -22 percent revenue number is a further indication that year-over-year revenue declines in Macau have already reached an inflection point and will cross back into positive territory by mid-year.

"We believe this will be driven by increase in overnight visitors, stable competition, better cost management and limited increases in staff salary,” he explains.

Related Link: Las Vegas Strip Revenue Up In December: What's It Mean For Investors

In addition, Morgan Stanley is projecting a return to double-digit Y/Y EBITDA growth in Macau by the end of 2016.

Morgan Stanley's top U.S.-listed Macau pick is Outperform-rated Melco Crown Entertainment Ltd (ADR) (NASDAQ: MPEL). The firm has an Equal-Weight rating on the China unit of Las Vegas Sands Corp. (NYSE: LVS) and an Underweight rating on the China units of MGM Resorts International (NYSE: MGM) and Wynn Resorts, Limited (NASDAQ: WYNN).

Disclosure: the author owns shares of Melco Crown Entertainment and Wynn.