Macau Gaming Sector Continues To See Mass Gaming Growth On Heels Of Near-Term Risk

Casino stocks continue to gain on Macau news.

Shares of Las Vegas Sands LVS, Melco Crown Entertainment MPEL, Wynn Resorts WYNN, MGM Resorts MGM and Caesars Entertainment CZR continue to trade higher this week amid the prospective gaming approval in Japan and Macau officials comments on point of sale (POS) machines.

Casino News Recap for June 22-28

Last week, Secretary for Economy and Finance Francis Tam commented that "Macau Monetary Authority gave no instructions to remove all point of sale (POS) machines from jewelry and luxury stores located inside or outside casinos, contradicting to previous media reports."

Caesars Entertainment was rumored to agree to a debt restructuring deal by Reuters. The company's CEO noted that the debt restructuring would not hurt Caesars financing in Japan.

The company also announced that it will close the Showboat Atlantic City casino in August due to the decrease in revenue and high property tax.

Barclays Comments on Macau

Barclays analyst Phoebe Tse remains optimistic on the sector following her trip to Macau last week. Tse remarked that the Macau casinos will see a "limited" impact from the smoking ban, as smoking rooms could be architected in the casino design. The analyst added that mass gaming continues to be a growth driver for the sector, with floors "still packed."

Tse commented that the "biggest risk" for the companies are the slowing VIP growth. Barclays continued to note that moving UnionPay shops and reducing the time for the visa process for Macau visits are "simply noise."

Other firms including Morgan Stanley, Citigroup, Wells Fargo and Daiwa continue to cite positive view over the sector as well. Despite near-term risk, the general consensus remains optimistic on Macau and Japanese legislation.

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Posted In: Analyst ColorLong IdeasNewsShort IdeasManagementGlobalAnalyst RatingsTrading IdeasBarclaysMacauPhoebe Tse
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