Deutsche Bank Sees 2015 Turnaround In Macau Gaming Revenue

Macau casino investors in search of a silver lining in recent dark news can tell themselves the worst is over, an analyst said Thursday.

Deutsche Bank's Carlo Santarelli thinks the drastic slowdown in revenue resulting from a Chinese corruption crack-down and economic softness is fully priced in to Macau casino stocks.

And revenue flow could start speeding up next year.

Santarelli cited an expected "return to growth" in 2015 for maintaining Buy ratings on Wynn Resorts, Limited WYNN and Las Vegas Sands Corp. LVS in a research note. Both stocks have fallen substantially in recent months.

At the same time however, the analyst trimmed his forecast for total 2015 Macau gaming revenue growth to 7.2 percent, from 11.5 percent.

Santarelli also cut his target on Wynn seven percent to $225 and by 12 percent on Sands to $74.

Prior to the expected 2015 turnaround, headwinds continue to blow. August gaming revenue in Macau fell 6.1 percent in a third sequential monthly decline. The drop off, posted Monday, was steeper than the two percent decline expected on Wall Street.

Santarelli and other analysts attribute much of the decline to China's corruption crackdown that the government says has "disciplined" 84,000 officials since January 1.

Also last week, union leaders staged what may have been the first industrial labor action ever taken in Macau, with some workers showing up late for their shift and others vowing to refuse overtime, Reuters reported.

"We expect the near-term to remain tough," Santarelli said.

Wynn and Las Vegas Sands were little changed in Thursday morning trading.