Investors – Las Vegas Sands, Wynn Resorts, MGM Resorts International and others with casinos in Macau could be negatively affected by a slowdown in gambling revenue in the Chinese gaming hotspot.
Wells Fargo analyst Cameron McKnight said in a report Monday that channel checks show April gaming revenue in the former Portuguese colony, now the top global casino gambling destination, is trending between 5% and 10% growth, well below the bank’s earlier midteens estimate.
McKnight had earlier said he expected a slowdown in Macau gaming revenue in mid-2014, due to a possible slowdown in the high-roller “VIP” segment gaming that comes amid weaker lending and a softer Chinese economy.
“April growth of 7.5% (the midpoint of the revised estimate) would imply 2% year over year VIP (gambling revenue growth),” McKnight said in the report, although that would be offset somewhat by 20% growth in so-called “mass market” middle-class and tourist gaming revenue.
McKnight said he remains bullish on Macau casinos long-term, and last week Wells Fargo spoke to more than 30 investors about Macau gaming prospects.
“We believe most investors are looking for opportunities to buy Macau stocks rather than short Macau stocks,” he said in the report.
