Morgan Stanley's Thomas Allen stuck his neck out in a research note from Tuesday morning, giving a very favorable outlook on the Casino & Gaming sector amid continued momentum in Macau and a more optimistic view on sector growth.
Allen had this to say about Macau's 2014 outlook: “Following stronger-than-expected momentum in 4Q13, as a firm we are increasing our 2014 Macau gaming revenue growth estimate from 13 percent to 18 percent, driven by 28 percent growth in mass market and 13 percent in VIP. We have been most surprised by the fact mass revenue has accelerated despite the lack of new hotel rooms or significant visitation growth, but understand now that the mix shift to higher quality/premium mass visitors can have a more profound effect.”
Praveen Choudhary, a member of Morgan Stanley's Asian Gaming & Lodging team, noted his three largest concerns:
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- labor / room supply shortages, and
- license expiry.
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